Designing Games for Group Benefit

In This Chapter

  • Some subtle incentive problems
  • An introduction to mechanism design
  • Auctionlike mechanisms
  • Generalizing the Vickrey approach
  • Why no mechanism is perfect

In Chapter 15 you learned how auction design affects the way bidders strategize. Vickrey’s insight, in particular, takes strategizing to a higher level by giving us the possibility of designing games in which honest revelation is a dominant strategy. This chapter builds on the theme of shaping participants’ behavior in group situations. Game theorists have designed some nifty ways to keep players honest but, as you will discover, these ...

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