DOI link to open access article:
Optimal mechanism design with approximate incentive compatibility and many players
Journal of Mechanism and Institution Design
Volume 8, issue 1, pages 97-106 (December 2023)
We consider a setting in which a mechanism designer must choose the appropriate social alternative depending on the state of nature. We study the problem of optimal design and demonstrate that a mechanism which allocates resources so as to achieve the social optimum and assigns payments equal to the posterior expected utility of the agent at the social optimum, is an ε-optimal mechanism for environments with many players.
Keywords: Mechanism design, incentive compatibility, statistical decision theory.
JEL Classification Numbers: D60, D61, D62.