(No) Foundations of dominant-strategy mechanisms: a comment on Chung and Ely (2007)
Tilman Börgers ()
Review of Economic Design, 2017, vol. 21, issue 2, No 1, 73-82
Abstract:
Abstract This comment revisits Chung and Ely (Rev Econ Stud 74:447–476, 2007) in which robustly optimal auctions where investigated. Chung and Ely used a maxmin approach to define robust optimality. Chung and Ely provided conditions under which dominant strategy auctions are robustly optimal in their sense. This comment proposes a refinement of Chung and Ely’s criterion and shows that, with this refined criterion, dominant strategy auctions are not optimal if there are at least three bidders. According to the refinement the auctioneer should not choose dominated auctions, that is, auctions for which there exist other mechanisms that never generate lower expected revenue, and sometimes higher expected revenue. We construct such a dominating mechanism for dominant strategy auctions. The construction exploits the possibility of side bets when beliefs are not derived from common priors. Chung and Ely (Rev Econ Stud 74:447–476, 2007) admitted such beliefs.
Keywords: Optimal auctions; Robust mechanism design; Side bets; Maxmin foundations (search for similar items in EconPapers)
JEL-codes: D82 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)
Downloads: (external link)
http://link.springer.com/10.1007/s10058-017-0201-0 Abstract (text/html)
Access to the full text of the articles in this series is restricted.
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:spr:reecde:v:21:y:2017:i:2:d:10.1007_s10058-017-0201-0
Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/10058
DOI: 10.1007/s10058-017-0201-0
Access Statistics for this article
Review of Economic Design is currently edited by Atila Abdulkadiroglu, Fuhito Kojima and Tilman Börgers
More articles in Review of Economic Design from Springer, Society for Economic Design
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().