Optimal mechanism design with approximate incentive compatibility and many players

DOI link to open access article: Optimal mechanism design with approximate incentive compatibility and many players

Pathikrit Basu

Journal of Mechanism and Institution Design
Volume 8, issue 1, pages 97-106 (December 2023)
doi: 10.22574/jmid.2023.12.004

Abstract:

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.