Finite supermodular design with interdependent valuations

Laurent Mathevet and Ina Taneva ()

Games and Economic Behavior, 2013, vol. 82, issue C, 327-349

Abstract: This paper studies supermodular mechanism design in environments with arbitrary (finite) type spaces and interdependent valuations. In these environments, the designer may have to use Bayesian equilibrium as a solution concept, because ex-post implementation may not be possible. We propose direct (Bayesian) mechanisms that are robust to certain forms of bounded rationality while controlling for equilibrium multiplicity. In quasi-linear environments with informational and allocative externalities, we show that any Bayesian mechanism that implements a social choice function can be converted into a supermodular mechanism that also implements the original decision rule. The proposed supermodular mechanism can be chosen in a way that minimizes the size of the equilibrium set, and we provide two sets of sufficient conditions to this effect. This is followed by conditions for supermodular implementation in unique equilibrium.

Keywords: Implementation; Mechanisms; Multiple equilibrium problem; Learning; Strategic complementarities; Supermodular games (search for similar items in EconPapers)
JEL-codes: C72 D78 D83 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:82:y:2013:i:c:p:327-349

DOI: 10.1016/j.geb.2013.07.006

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