Publication Type

Journal Article

Version

publishedVersion

Publication Date

11-2019

Abstract

We define and investigate a property of mechanisms that we call "strategic simplicity," and that is meant to capture the idea that, in strategically simple mechanisms, strategic choices require limited strategic sophistication. We define a mechanism to be strategically simple if choices can be based on first-order beliefs about the other agents' preferences and first-order certainty about the other agents' rationality alone, and there is no need for agents to form higher-order beliefs, because such beliefs are irrelevant to the optimal strategies. All dominant strategy mechanisms are strategically simple. But many more mechanisms are strategically simple. In particular, strategically simple mechanisms may be more flexible than dominant strategy mechanisms in the bilateral trade problem and the voting problem.

Keywords

Mechanism design, strategic simplicity, first-order belief, local dictatorship, voting, bilateral trade

Discipline

Economic Theory

Research Areas

Economic Theory

Publication

Econometrica

Volume

87

Issue

6

First Page

2003

Last Page

2035

ISSN

0012-9682

Identifier

10.3982/ECTA15897

Publisher

Econometric Society

Additional URL

https://doi.org/10.3982/ECTA15897

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