IDEAS home Printed from https://ideas.repec.org/a/wly/emetrp/v92y2024i5p1391-1438.html
   My bibliography  Save this article

On the Structure of Informationally Robust Optimal Mechanisms

Author

Listed:
  • Benjamin Brooks
  • Songzi Du

Abstract

We study the design of optimal mechanisms when the designer is uncertain both about the form of information held by the agents and also about which equilibrium will be played. The guarantee of a mechanism is its worst performance across all information structures and equilibria. The potential of an information structure is its best performance across all mechanisms and equilibria. We formulate a pair of linear programs, one of which is a lower bound on the maximum guarantee across all mechanisms, and the other of which is an upper bound on the minimum potential across all information structures. In applications to public expenditure, bilateral trade, and optimal auctions, we use the bounding programs to characterize guarantee‐maximizing mechanisms and potential‐minimizing information structures and show that the max guarantee is equal to the min potential.

Suggested Citation

  • Benjamin Brooks & Songzi Du, 2024. "On the Structure of Informationally Robust Optimal Mechanisms," Econometrica, Econometric Society, vol. 92(5), pages 1391-1438, September.
  • Handle: RePEc:wly:emetrp:v:92:y:2024:i:5:p:1391-1438
    DOI: 10.3982/ECTA20240
    as

    Download full text from publisher

    File URL: https://doi.org/10.3982/ECTA20240
    Download Restriction: no

    File URL: https://libkey.io/10.3982/ECTA20240?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Bergemann, Dirk & Brooks, Benjamin & Morris, Stephen, 2020. "Countering the winner's curse: optimal auction design in a common value model," Theoretical Economics, Econometric Society, vol. 15(4), November.
    2. Dirk Bergemann & Benjamin Brooks & Stephen Morris, 2016. "Informationally Robust Optimal Auction Design," Working Papers 084_2016, Princeton University, Department of Economics, Econometric Research Program..
    3. Werner Güth & Martin Hellwig, 1986. "The private supply of a public good," Journal of Economics, Springer, vol. 5(1), pages 121-159, December.
    4. Eric Maskin, 1999. "Nash Equilibrium and Welfare Optimality," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 66(1), pages 23-38.
    5. Chen, Yi-Chun & Li, Jiangtao, 2018. "Revisiting the foundations of dominant-strategy mechanisms," Journal of Economic Theory, Elsevier, vol. 178(C), pages 294-317.
    6. Roger B. Myerson, 1981. "Optimal Auction Design," Mathematics of Operations Research, INFORMS, vol. 6(1), pages 58-73, February.
    7. Cremer, Jacques & McLean, Richard P, 1988. "Full Extraction of the Surplus in Bayesian and Dominant Strategy Auctions," Econometrica, Econometric Society, vol. 56(6), pages 1247-1257, November.
    8. He, Wei & Li, Jiangtao, 2022. "Correlation-robust auction design," Journal of Economic Theory, Elsevier, vol. 200(C).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Daeyoung Jeong & Tongseok Lim & Euncheol Shin, 2024. "Robust Intervention in Networks," Papers 2501.00235, arXiv.org, revised Feb 2025.
    2. Guanyi Wang, 2024. "Robust Network Targeting with Multiple Nash Equilibria," Papers 2410.20860, arXiv.org, revised Nov 2024.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wanchang Zhang, 2022. "Auctioning Multiple Goods without Priors," Papers 2204.13726, arXiv.org.
    2. Wanchang Zhang, 2022. "Robust Private Supply of a Public Good," Papers 2201.00923, arXiv.org, revised Jan 2022.
    3. He, Wei & Li, Jiangtao, 2022. "Correlation-robust auction design," Journal of Economic Theory, Elsevier, vol. 200(C).
    4. Wei He & Jiangtao Li & Weijie Zhong, 2024. "Rank-Guaranteed Auctions," Papers 2408.12001, arXiv.org.
    5. Ethan Che, 2019. "Distributionally Robust Optimal Auction Design under Mean Constraints," Papers 1911.07103, arXiv.org, revised Feb 2022.
    6. Bierbrauer, Felix & Netzer, Nick, 2016. "Mechanism design and intentions," Journal of Economic Theory, Elsevier, vol. 163(C), pages 557-603.
    7. Csapó, Gergely & Müller, Rudolf, 2013. "Optimal mechanism design for the private supply of a public good," Games and Economic Behavior, Elsevier, vol. 80(C), pages 229-242.
    8. Çağıl Koçyiğit & Garud Iyengar & Daniel Kuhn & Wolfram Wiesemann, 2020. "Distributionally Robust Mechanism Design," Management Science, INFORMS, vol. 66(1), pages 159-189, January.
    9. Mariann Ollár & Antonio Penta, 2021. "A Network Solution to Robust Implementation: The Case of Identical but Unknown Distributions," Working Papers 1248, Barcelona School of Economics.
    10. Benjamin Brooks & Songzi Du, 2021. "Optimal Auction Design With Common Values: An Informationally Robust Approach," Econometrica, Econometric Society, vol. 89(3), pages 1313-1360, May.
    11. Chen, Jiakai, 2021. "LIBOR's poker," Journal of Financial Markets, Elsevier, vol. 55(C).
    12. Loertscher, Simon & Marx, Leslie M., 2020. "Asymptotically optimal prior-free clock auctions," Journal of Economic Theory, Elsevier, vol. 187(C).
    13. Ledyard, John O. & Palfrey, Thomas R., 2007. "A general characterization of interim efficient mechanisms for independent linear environments," Journal of Economic Theory, Elsevier, vol. 133(1), pages 441-466, March.
    14. Daeyoung Jeong & Tongseok Lim & Euncheol Shin, 2024. "Robust Intervention in Networks," Papers 2501.00235, arXiv.org, revised Feb 2025.
    15. Krajbich, Ian & Camerer, Colin & Rangel, Antonio, 2017. "Exploring the scope of neurometrically informed mechanism design," Games and Economic Behavior, Elsevier, vol. 101(C), pages 49-62.
    16. Mariann Ollár & Antonio Penta, 2019. "Implementation via transfers with identical but unknown distributions," Economics Working Papers 1676, Department of Economics and Business, Universitat Pompeu Fabra.
    17. Surajeet Chakravarty & W. Bentley MacLeod, 2009. "Contracting in the shadow of the law," RAND Journal of Economics, RAND Corporation, vol. 40(3), pages 533-557, September.
    18. Li, Yunan & Zhang, Xingtan, 2024. "Collective decision through an informed mediator," Journal of Economic Theory, Elsevier, vol. 218(C).
    19. Mukherjee, Saptarshi & Muto, Nozomu & Sen, Arunava, 2024. "Implementation in undominated strategies with applications to auction design, public good provision and matching," Journal of Economic Theory, Elsevier, vol. 216(C).
    20. Wanchang Zhang, 2022. "Information-Robust Optimal Auctions," Papers 2205.04137, arXiv.org.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:emetrp:v:92:y:2024:i:5:p:1391-1438. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/essssea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.