Lexicographic Robustness and the Efficiency of Optimal Mechanisms

Ashwin Kambhampati

Papers from arXiv.org

Abstract: The maxmin criterion is commonly used to formalize a mechanism designer's concern for robustness over a set of possible environments. Without substantially restricting this set, however, the criterion may identify a large and economically uninformative collection of mechanisms. This paper proposes a lexicographic, belief-based approach to refining the maxmin criterion and uses it to analyze the efficiency of optimal mechanisms. In canonical screening and auction models, the strongest refinement $\unicode{x2013}$ proper robustness $\unicode{x2013}$ selects ex post efficient mechanisms. By contrast, in a public good provision model, it identifies a unique mechanism whose inefficiency may become severe in large economies.

Date: 2026-04, Revised 2026-10
New Economics Papers: this item is included in nep-des and nep-mic
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