Robust Mechanism Design The Role of Private Information and Higher Order Beliefs

Foreword writer Eric Maskin (Nobel Laureate in Economics, 2007) This volume brings together the collected contributions on the theme of robust mechanism design and robust implementation that Dirk Bergemann and Stephen Morris have been working on for the past decade. The collection is preceded by a comprehensive introductory essay, specifically written for this volume with the aim of providing the readers with an overview of the research agenda pursued in the collected papers. The introduction selectively presents the main results of the papers, and attempts to illustrate many of them in terms of a common and canonical example, namely a single unit auction with interdependent values. It is our hope that the use of this example facilitates the presentation of the results and that it brings the main insights within the context of an important economic mechanism, namely the generalized second price auction. Sample Chapter(s) Foreword writer Eric Maskin (Nobel Laureate in Economics, 2007) (33 KB) Robust Mechanism Design: An Introduction (252 KB) Chapter 12: Robust Monopoly Pricing (174 KB) Introductory slides Contents:Robust Mechanism DesignEx Post ImplementationRobust Implementation in Direct MechanismsRobust Implementation in General MechanismsThe Role of the Common Prior in Robust ImplementationAn Ascending Auction for Interdependent Values: Uniqueness and Robustness to Strategic UncertaintyRobust Virtual ImplementationMultidimensional Private Value AuctionsThe Robustness of Robust ImplementationRationalizable ImplementationPricing without PriorsRobust Monopoly Pricing Readership: Graduate students and researchers who are interested in Economic Theory. Keywords:Mechanism Design;Game Theory;Auction Theory;Implementation;Private Information;First and Higher-Order Belief;BayesNash Equilibrium;Ex Post Equilibrium;Rationalizability;Vickrey-Clarke-Groves Mechanisms;Private Value;Interdependent Value;Common Value;Belief-Free MechanismsKey Features:This volume is written by well-known researchers in economic theoryIt presents the main themes and results of the research on “robust mechanism design” and “robust implementation” through promiment examplesIt includes a new introductory essay that provides the readers with an overview of the research agenda pursued in the collected papers. The introduction selectively presents the main results of the papers, and attempts to illustrate many of them in terms of a common and canonical example, the single unit auction with interdependent valueReviews: “Equilibrium robustness in informational variables is critical, if one wants to use results from the mechanism design literature in real life applications. The papers included in the Bergemann and Morris book describe state of the art progress in this direction of research. The book is an excellent resource for established game theorists, who want to learn more about this subject; and for PhD students, who look for exciting problems to investigate.” Ehud Kalai Kellogg School of Management, Northwestern University “This book collects together a series of papers on mechanism design written by Dirk Bergemann and Stephen Morris. It is their response to the challenge set by Robert Wilson in his eponymous doctrine: Only by repeated weakening of common knowledge assumptions will the theory approximate reality. Many scholars responded by arguing for solution concepts robust to the beliefs of the agents. The approach taken by Bergemann and Morris was radically different. They hitched their wagon to Harsany's observation that relaxing the common knowledge assumption was equivalent to enlarging the type space. Then, they proceed to develop the properties of mechanisms that would emerge. For this reason, this collection is essential reading for any student interested in taking up the challenge of the Wilson doctrine. The introduction by itself is worth the price of admission!” Rakesh Vohra Kellogg School of Management, Northwestern University “Mechanism design has been one of the great successes of economic theory in the last 30 years. Robust mechanism design, the study of optimal mechanisms in settings where the designer has less information about the beliefs of the agents, is the natural next step in the evolution of this field. Bergemann and Morris are two of the leading figures in developing this new theory, and this book combines many of their papers with an excellent introduction that overviews the field and explains how their papers fit together. Highly recommended to all students and practitioners of economic theory, and essential reading for would-be mechanism designers.” Drew Fudenberg Department of Economics, Harvard University “The question of the design of institutions has been at the center of some of the most important economic theory in the past four decades. Bergemann and Morris have made seminal contributions to the understanding of how uncertainty can and should be incorporated into mechanism design, and this volume reproduces a collection of their most important work in the area. The volume will be an important reference for those working in the area and those who wish to apply the ideas in economic models.” Andrew Postlewaite Department of Economics, University of Pennsylvania