ROBUST

Robust Mechanism Design and Robust Prediction in Games – Grant n° 714693

Abstract

In the last several decades, it has been extensively studied how strategic behavior of economic agents could affect the outcomes of various institutions. Game theory and mechanism design theory play key roles in understanding economic agents' possible behavior in those institutions, its welfare consequences, and how we should design economic institutions to achieve desired social objectives even if the agents behave strategically for their own interests.
However, existing studies mostly focus on somewhat narrow classes of economic environments by imposing restrictive assumptions. The proposed projects aim at providing novel theoretical frameworks which enable us to study agents' behavior and desirable institutions under much less assumptions. I believe that the projects have significant relevance in policy recommendation in practice and empirical studies, even though the proposed projects are primarily theoretical.

In mechanism design, most papers in the literature focus on environments with independently distributed private information. We propose two novel (robustness-based) approaches to analyze mechanism design in correlated environments, motivated by their practical and empirical relevance. The robustness brought by my approach can be useful to mitigate certain types of misspecifications. Moreover, the desirable robust mechanisms I obtain appear to be more sensible, and hence, can be useful for some empirical studies of auction and other mechanism design problems.

In game theory, it is often assumed that the game the players play is common knowledge, or even if there is uncertainty, uncertain variables are assumed to follow a common-knowledge prior .However, in many situations in reality, those assumptions do not seem to be satisfied. One of the objectives is to provide a novel theoretical framework to predict players' behavior in such incompletely specified games. Also, we aim at identifying the conditions for (monotone) comparative statics in such situations.

 

Project date: 2016 – 2021

Contact in TSE: Takuro YAMASHITA