Continuous Level-k Mechanism Design

Bravo Working Paper # 2021-002

54 Pages Posted: 26 Mar 2021

See all articles by Roberto Serrano

Roberto Serrano

Brown University

Rene Saran

University of Cincinnati - Department of Economics

Geoffroy de Clippel

Brown University - Department of Economics

Date Written: February 23, 2021

Abstract

In de Clippel, Saran, and Serrano (2019), it is shown that, perhaps surprisingly, the set of implementable social choice functions is essentially the same whether agents have bounded depth of reasoning or rational expectations. The picture is quite different when taking into account the possibility of small modeling mistakes. While continuous strict implementation becomes very demanding (Oury and Tercieux (2012) – OT), continuity in level-k implementation obtains essentially for free. A decomposition of the conditions implied by the OT implementation notion confirms that it is the use of equilibrium, and not continuity per se, that is responsible for the difference.

Keywords: mechanism design; bounded rationality; level-k reasoning; small modeling mistakes; incentive compatibility; continuity

JEL Classification: C72, D70, D78, D82

Suggested Citation

Serrano, Roberto and Saran, Rene and de Clippel, Geoffrey, Continuous Level-k Mechanism Design (February 23, 2021). Bravo Working Paper # 2021-002, Available at SSRN: https://ssrn.com/abstract=3791540 or http://dx.doi.org/10.2139/ssrn.3791540

Roberto Serrano (Contact Author)

Brown University ( email )

64 Waterman Street
Providence, RI 02912
United States
401-863-1036 (Phone)
401-863-1970 (Fax)

Rene Saran

University of Cincinnati - Department of Economics ( email )

Carl H. Lindner Hall 2925 Campus Green Drive
PO Box 0371
Cincinnati, OH 45221-0211
United States

Geoffrey De Clippel

Brown University - Department of Economics ( email )

64 Waterman Street
Providence, RI 02912
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
21
Abstract Views
210
PlumX Metrics