Mechanism Design with Set-Theoretic Beliefs
Speaker: Jing Chen , CSAIL, MIT
Date: November 17 2011
Time: 12:00PM to 1:00PM
Location: E62-550
Host: Silvio Micali, CSAIL, MIT
Contact: Be Blackburn, 3-6098, imbe@mit.edu
In settings of incomplete information, we put forward (1) a very
conservative—indeed, purely set-theoretic—model of the beliefs
(including totally wrong ones) that each player may have about the
payoff types of his opponents, and (2) a new and robust solution
concept, based on mutual belief of rationality, capable of leveraging
such conservative beliefs. We exemplify the applicability of our new
approach for single-good auctions, by showing that, under our solution
concept, a normal-form, simple, and deterministic mechanism
guarantees—up to an arbitrarily small, additive constant—a revenue
benchmark that is always greater than or equal to the second-highest
valuation, and sometimes much greater. By contrast, we also prove that
the same benchmark cannot even be approximated within any positive
factor, under classical solution concepts.
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