Obviously Strategy-Proof Mechanisms

Abstract

A strategy is obviously dominant if, for any deviation, at any information set where both strategies first diverge, the best outcome under the deviation is no better than the worst outcome under the dominant strategy. A mechanism is obviously strategy-proof (OSP) if it has an equilibrium in obviously dominant strategies. This has a behavioral interpretation: A strategy is obviously dominant iff a cognitively limited agent can recognize it as weakly dominant. It also has a classical interpretation: A choice rule is OSP-implementable iff it can be carried out by a social planner under a particular regime of partial commitment.

Arbitration, Indivisible Assets and the Possibility of Malice

“…Next, we discuss the applicability of 'obviously strategy-proof mechanisms' considered in Li (2017). Li describes a mechanism as 'obviously strategy-proof' if it has an equilibrium in obviously (weakly) dominant strategies, the idea being that even players with limited cognition can play weakly dominant strategies: players' higher order beliefs about other players' knowledge or behaviour do not need to be considered.…”

“…Among the mechanisms considered, only mechanism L (the judgment proofness mechanism, Proposition 5) involves both players having dominant strategies (A's is to say 'mine', B's -assuming wealth is verifiable -is to say 'hers'). Thus mechanism L is 'obviously strategy-proof' in the sense of Li (2017): the rest of the mechanisms depend on A knowing that B will not play her dominated strategy.…”

Credible Auctions: A Trilemma

“…The papers closest to ours are Dequiedt and Martimort (2015) and Li (2017). In Dequiedt and Martimort (2015), two agents simultaneously and privately report their types to the principal, who can misrepresent each agent's report to the other agent.…”

“…However, this restriction loses some generality, so our model instead permits the auctioneer to communicate sequentially with bidders by adopting extensive-form mechanisms. Li (2017) proposed a definition of bilateral commitment power, and also introduced the messaging game that we use here. The definition in Li (2017) is restricted to dominant-strategy mechanisms, whereas credibility allows for Bayes-Nash mechanisms.…”

Strategically Simple Mechanisms

“…It is easy to see that the first mechanism in Proposition 3 is type 2 strategically simple even in the single-peaked domain when the alternatives are arranged in alphabetical order, whereas the second mechanism is type 1 strategically simple on the single-peaked domain. Li (2017) proposed the concept of "obviously strategy-proof mechanisms." These mechanisms form a subclass of dominant strategy mechanisms in which it is particularly easy for agents to recognize that they have a dominant strategy.…”