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Credible Mechanism Design

42 Pages Posted: 11 Sep 2017 Last revised: 17 Oct 2017

Mohammad Akbarpour

Stanford Graduate School of Business

Shengwu Li

Harvard University - Society of Fellows

Date Written: October 13, 2017

Abstract

Consider an extensive-form mechanism, run by an auctioneer who communicates sequentially and privately with agents. Suppose the auctioneer can make any deviation that no single agent can detect. We study the mechanisms such that it is incentive-compatible for the auctioneer not to deviate -- the credible mechanisms. Consider the ex post individually-rational optimal auctions. The first-price auction is the unique sealed-bid credible mechanism. The ascending auction is the unique strategy-proof credible mechanism.

Keywords: Mechanism Design, Auction, Credible, Strategy-Proof

JEL Classification: D44, D47, D82

Suggested Citation

Akbarpour, Mohammad and Li, Shengwu, Credible Mechanism Design (October 13, 2017). Available at SSRN: https://ssrn.com/abstract=3033208

Mohammad Akbarpour

Stanford Graduate School of Business ( email )

Shengwu Li (Contact Author)

Harvard University - Society of Fellows ( email )

Cambridge, MA
United States

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