Mechanism Design without Rational Expectations
Draft available upon request
The Bayesian implementation literature has identified in Bayesian Incentive Compatibility (BIC) a key condition that a social choice rule has to satisfy to be fully implementable by a social planner. I propose a generalized model of implementation that does not assume rational expectations, and I characterize the class of solution concepts such that BIC is necessary for full implementation of functions. I find we can not expect significantly more permissive results by dropping the rational expectations assumption and moving to non-equilibrium models. Using the same conditions, I prove that some classical results (including Myerson and Satterthwaite’s impossibility of efficient bilateral trade) hold for a wide range of non-equilibrium solution concepts.
Paper presentations: Boston College Graduate Reading Group, 12th Conference on Economic Design, 16th SSCW Meeting, University of Bologna (Internal Seminar, 2022), SING17, 33rd Stony Brook International Conference, 1st NSEF Worskhop.
Work in Progress
Mechanism Design under Outcome Constraints
In the traditional implementation framework, it is assumed the planner has almost complete freedom in choosing the mechanism she will use to implement the social choice rule. I generalise the model by requiring the implementing mechanism to also satisfy some exogenously imposed constraints on the outcomes in each agent’s opportunity set. I discuss applications of this framework to mechanism design in network environments and to one-sided matching with priorities.