The expected externality mechanism in a level-k environment

Gorelkina, O ORCID: 0000-0002-0873-8873 (2018) The expected externality mechanism in a level-k environment. International Journal of Game Theory, 47 (1). pp. 103-131.

Text e-offprintIGJT.pdf - Author Accepted Manuscript Download (683kB)

Abstract

Mechanism design theory strongly relies on the concept of Nash equilibrium. However, studies of experimental games show that Nash equilibria are rarely played and that subjects may be thinking only a finite number of iterations. We study one of the most influential benchmarks of mechanism design theory, the expected externality mechanism (D’Aspremont and Gerard-Varet, J Public Econ 11:25–45, 1979) in a finite-depth environment described by the Level-k model. While the original mechanism may fail to implement the efficient rule in this environment, it can be adjusted to restore efficiency.

Item Type:	Article
Additional Information:	Source info: MPI Collective Goods Preprint, No. 2015/3
Uncontrolled Keywords:	expected externality, externality mechanisms, level-k, bounded rationality
Depositing User:	Symplectic Admin
Date Deposited:	28 Sep 2017 13:23
Last Modified:	19 Jan 2023 06:53
DOI:	10.1007/s00182-017-0579-5
Related URLs:	Author Publisher
URI:	https://livrepository.liverpool.ac.uk/id/eprint/3009684