Fixed-Price Approximations in Bilateral Trade

Kang, Zi Yang; Pernice, Francisco; Vondrák, Jan

doi:10.1137/1.9781611977073.115

Cited by 9 publications

(1 citation statement)

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“…Blumrosen and Dobzinski [4] show that for every pair of distributions of types for the buyer and seller there exists a IR, WBB, fixed-price mechanism -a mechanism that posts a price asks players to "take it or leave it" -that achieves at least a (1 − 1/e) fraction of the optimal efficiency in dominated strategies. This was improved to (1 − 1/e) + 10 −4 by Kang, Pernice, and Vondrák [16].…”

Section: Bilateral Tradementioning

confidence: 93%

Non-Obvious Manipulability for Single-Parameter Agents and Bilateral Trade

Archbold¹,

Keijzer²,

Ventre³

2022

Preprint

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A recent line of work in mechanism design has focused on guaranteeing incentive compatibility for agents without contingent reasoning skills: obviously strategyproof mechanisms [20] guarantee that it is "obvious" for these imperfectly rational agents to behave honestly, whereas non-obviously manipulable (NOM) mechanisms [26] take a more optimistic view and ensure that these agents will only misbehave when it is "obvious" for them to do so. Technically, obviousness requires comparing certain extrema (defined over the actions of the other agents) of an agent's utilities for honest behaviour against dishonest behaviour.We present a technique for designing NOM mechanisms in settings where monetary transfers are allowed based on cycle monotonicity, which allows us to disentangle the specification of the mechanism's allocation from the payments. By leveraging this framework, we completely characterise both allocation and payment functions of NOM mechanisms for single-parameter agents. We then look at the classical setting of bilateral trade and study whether and how much subsidy is needed to guarantee NOM, efficiency, and individual rationality. We prove a stark dichotomy; no finite subsidy suffices if agents look only at best-case extremes, whereas no subsidy at all is required when agents focus on worst-case extremes. We conclude the paper by characterising the NOM mechanisms that require no subsidies whilst satisfying individual rationality.

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Section: Bilateral Tradementioning

confidence: 93%