We consider mechanism design problems in which agents perceive Knightian uncertainty. Uncertainty is formalized using incomplete preferences, as in Bewley (1986). Without completeness, individual decision making depends on a set of beliefs, and an action is preferred to another if and only if it has larger expected utility for all beliefs in this set. We consider two natural notions of incentiv...

Subjective beliefs are crucial for economic inference, yet behavior can challenge the elicitation. We propose that belief elicitation should be incentive compatible not only theoretically but also in a de facto behavioral sense. To demonstrate, we show binarized scoring rule, state-of-the-art elicitation, violates two weak conditions compatibility: (i) within information on incentives increases...

In mechanism design, the gold standard solution concepts are dominant strategy incentive compatibility and Bayesian incentive compatibility. These solution concepts relieve the (possibly unsophisticated) bidders from the need to engage in complicated strategizing. While incentive properties are simple to state, their proofs are specific to the mechanism and can be quite complex. This raises two...

(a) Establish a necessary and su¢ cient condition for the ex post incentive compatibility of the e¢ cient allocation. Explicitly derive a transfer schedule that achieves the e¢ cient allocation with ex post incentive compatibility and ex post participation constraint (i.e. each bidder receives nonnegative net utility and to be precise zero net utility if s/he loses) in the direct revelation mec...

We consider the problem of fairly allocating one indivisible object when monetary transfers are possible, and examine the existence of Bayesian incentive compatible mechanisms to solve the problem. We propose a mechanism that satisfies envy-freeness, budget balancedness, and Bayesian incentive compatibility. Further, we establish the uniqueness of the mechanism under an order additivity conditi...

We examine a general equilibrium model with asymetrically informed agents. The presence of asymmetric information generally presents a con°ict between incentive compatibility and Pareto e±ciency. We present a notion of informational size and show that the con°ict between incentive compatibility and e±ciency can be made arbitrarily small if agents are su±ciently small informationally .

It is well-known that the ability of the Vickrey-Clarke-Groves (VCG) mechanism to implement e¢ cient outcomes for private value choice problems does not extend to interdependent value problems. When an agent’s type a¤ects other agents’utilities, it may not be incentive compatible for him to truthfully reveal his type when faced with CGV payments. We show that when agents are informationally sma...

The single-crossing assumption simplifies the analysis of screening models as local incentive compatibility becomes sufficient for global incentive compatibility. If single crossing is violated, global incentive compatibility constraints have to be taken into account. This paper studies monotone solutions in a screening model that allows a one-time violation of single crossing. The results show...