Self-Confirming Mechanisms

Zhiming Feng and Qingmin Liu

Papers from arXiv.org

Abstract: This paper studies mechanism design environments in which the designer does not know the distribution of agents' private information a priori and instead learns from agents' behavior induced by the mechanism itself. We formalize a notion of self-confirming mechanisms and a refinement thereof, capturing the idea that an equilibrium mechanism is optimal given the designer's belief and that this belief is consistent with the information produced by the mechanism. We establish a fictitious revelation principle, showing that any incentive-compatible mechanism can be represented as a direct mechanism with filtered type reports that preserve the original mechanism's informational content. Applying the framework to a monopoly problem, we show that, subject to an equilibrium refinement, dominant-strategy self-confirming mechanisms are exactly posted-price mechanisms with locally revenue-maximizing prices.

Date: 2026-03
New Economics Papers: this item is included in nep-des, nep-gth and nep-mic
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