1 research outputs found
How to manipulate truthful prior-dependent mechanisms?
In the standard formulation of mechanism design, a key assumption is that the
designer has reliable information and technology to determine a prior
distribution on types of the agents. In the meanwhile, as pointed out by the
Wilson's Principle, a mechanism should reply as little as possible on the
accuracy of prior type distribution. In this paper, we put forward a model to
formalize and quantify this statement.
In our model, each agent has a type distribution. In addition, the agent can
commit to a fake distribution and bids consistently and credibly with respect
to the fake distribution (i.e., plays Bayes equilibrium under the fake
distributions). We study the equilibria of the induced distribution-committing
games in several well-known mechanisms. Our results can be summarized as
follows: (1) the game induced by Myerson's auction under our model is
strategically equivalent to the first price auction under the standard model.
As a consequence, they are revenue-equivalent as well. (2) the second-price
auction yields weakly better revenue than several reserve-based and
virtual-value-based auctions, under our fake distribution model. These results
echo the recent literature on prior-independent mechanism design.Comment: 29 pages, 1 figur