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Foundations of Dominant-Strategy Mechanisms

Author

Listed:
  • Kim-Sau Chung
  • J.C. Ely
Abstract
Robert Wilson criticizes applied game theory's reliance on common-knowledge assumptions. In reaction to Wilson's critique, the recent literature of mechanism design has adopted the goal of finding detail-free mechanisms in order to eliminate this reliance. In practice this has meant restricting attention to simple mechanisms such as dominant-strategy mechanisms. However, there has been little theoretical foundation for this approach. In particular it is not clear the search for an optimal mechanism that does not rely on common-knowledge assumption would lead to simpler mechanisms rather than more complicated ones. This paper tries to fill the void. In the context of an expected revenue maximizing auctioneer, we investigate some foundations for using simple, dominant-strategy auctions. Copyright 2007, Wiley-Blackwell.

Suggested Citation

  • Kim-Sau Chung & J.C. Ely, 2007. "Foundations of Dominant-Strategy Mechanisms," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 74(2), pages 447-476.
    • Handle: RePEc:oup:restud:v:74:y:2007:i:2:p:447-476
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    File URL: http://hdl.handle.net/10.1111/j.1467-937X.2007.00427.x
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    References listed on IDEAS

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    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly

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