Approximate Bayesian Implementation and Exact Maxmin Implementation: An Equivalence

Arbeitspapier

This paper provides a micro-foundation for approximate incentive compatibility using ambiguity aversion. In particular, we propose a novel notion of approximate interim incentive compatibility, approximate local incentive compatibility, and establish an equivalence between approximate local incentive compatibility in a Bayesian environment and exact interim incentive compatibility in the presence of a small degree of ambiguity. We then apply our result to the implementation of efficient allocations. In particular, we identify three economic settings – including ones in which approximately efficient allocations are implementable, ones in which agents are informationally small, and large double auctions – in which efficient allocations are approximately locally implementable when agents are Bayesian. Applying our result to those settings, we conclude that efficient allocations are exactly implementable when agents perceive a small degree of ambiguity.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Discussion Paper ; No. 362

Classification and Topics

• Classification: Wirtschaft
• Subject: approximate local incentive compatibility ; ambiguity aversion ; efficiency ; informational size ; modified VCG mechanism ; double auction

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Song, Yangwei
• Event: Veröffentlichung
• (who): Ludwig-Maximilians-Universität München und Humboldt-Universität zu Berlin, Collaborative Research Center Transregio 190 - Rationality and Competition
• (where): München und Berlin
• (when): 2022

Further information

• Handle: http://hdl.handle.net/10419/282054
• Last update: 10.03.2025, 11:42 AM CET