Abstract:

We propose a complete ranking of strategy-proof mechanisms in terms of the contingent reasoning they require agents to engage in to recognize their dominant strategy. Our rankings are consistent with the coarser ones implied by the solution concepts of (strong) obvious strategy-proofness (Li, 2017b; Pycia and Troyan, 2023b). The added flexibility of our approach allows a designer to balance a mechanism’s simplicity with other objectives. Our measure characterizes the Ausubel (2004) auction as the simplest way to implement the VCG outcome in multi-unit allocation problems with transfers, and provides novel rankings of mechanisms that implement stable outcomes in matching problems. Finally, we characterize minimally complex mechanisms for a range of settings, and formalize the intuition that some mechanisms are as simple as if they were (strongly) obviously strategy-proof. We explain how this extension can be valuable for highstakes applications such as the FCC incentive auction.

Joint with Roberto Saitto.

Paper available here.