Mechanism design and bounded rationality: The case of type misreporting

Javier Rivas

Mathematical Social Sciences, 2015, vol. 78, issue C, 6-13

Abstract: In this paper we study the effects of bounded rationality in mechanism design problems. We model bounded rationality by assuming that in the presence of an incentive compatible mechanism, players behave as if their types were in a δ-neighborhood of their true types. In our results, we explore what are the effects of such bounded rationality in the outcomes of the mechanism design problem. To such end, we characterize the social choice functions that are robust to the δ-perturbations in the sense that the designers’ loss is at most of order δk for a certain k. A notable finding is that in quasi-linear utilitarian environments the designer’s loss is of order of δ2. We illustrate the applicability of our results by means of examples.

Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0165489615000694
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:matsoc:v:78:y:2015:i:c:p:6-13

DOI: 10.1016/j.mathsocsci.2015.08.001

Access Statistics for this article

Mathematical Social Sciences is currently edited by J.-F. Laslier

More articles in Mathematical Social Sciences from Elsevier
Bibliographic data for series maintained by Catherine Liu ().