Motivation. The recent literature on mechanism design provides a series of studies on robustness issues, motivated by the idea that a desirable mechanism should not rely too heavily on the agents’ common knowledge structure (Wilson, 1985). One approach is to adopt stronger solution concepts that are insensitive to various common knowledge assumptions, such as dominant-strategy incentive compati...

We design two computationally-e cient incentive-compatible mechanisms for combinatorial auctions with general bidder preferences. Both mechanisms are randomized, and are incentivecompatible in the universal sense. This is in contrast to recent previous work that only addresses the weaker notion of incentive compatibility in expectation. The rst mechanism obtains an O( √ m)-approximation of the ...

The authors present a simple classroom experiment that can be used as a teaching device to introduce important concepts of organizational economics and incentive contracting. First, students take the role of a principal and design a contract that consists of a fixed payment and an incentive component. Second, students take the role of agents and decide on an effort level. The experiment illustr...

II. Examples of Problems Giving Rise to Incentive Compatibility Constraints A. If contributions to the cost of a public good are positively related to willingness to pay, there is an incentive to “free ride.” B. In an exchange economy setting, with agents whose preferences are unknown, there is the possibility of acting as a monopolist or monopsonist. C. In elections with more than two candidat...