Econometrica: Nov 2019, Volume 87, Issue 6

Strategically Simple Mechanisms

https://doi.org/10.3982/ECTA15897
p. 2003-2035

Tilman Börgers, Jiangtao Li

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.



Log In To View Full Content

Supplemental Material

Supplement to "Strategically Simple Mechanisms"

This appendix contains material not found within the manuscript.

Read More View PDF


Back