Technology Category
Game Theory and Economic Paradigms: Mechanism DesignMultiagent Systems: Mechanism DesignReasoning under Uncertainty: Decision/Utility Theory
Efficient Mechanisms under Unawareness
🤖 AI Summary
This paper addresses mechanism design under asymmetric awareness—where agents lack conceptual understanding rather than mere information. To maximize posterior expected utility for social choice functions, we propose a dynamic VCG mechanism that permits agents to progressively reveal and refine their types over endogenously evolving awareness levels, without requiring the social planner to possess full ex ante knowledge. The mechanism achieves ex post utilitarian efficiency under conditionally dominant strategies, while satisfying budget balance (no deficit) and individual rationality. We further develop a variant of the reverse second-price auction tailored to complex, ambiguous, and incompletely specified procurement settings. Theoretically, this work pioneers the integration of awareness modeling into mechanism design, eliminating “unforeseen contingencies” as a justification for fiscal imbalance. It provides the first general framework for asymmetric perception environments that simultaneously ensures efficiency, incentive compatibility, and fiscal sustainability.
Technology Category
Application Category
📝 Abstract
We study the design of efficient mechanisms under asymmetric awareness and information. Unawareness refers to the lack of conception rather than the lack of information. Assuming quasi-linear utilities and private values, we show that we can implement in conditional dominant strategies a social choice function that is utilitarian ex-post efficient when pooling all awareness of all agents without the need of the social planner being fully aware ex-ante. To this end, we develop novel dynamic versions of Vickrey-Clarke-Groves mechanisms in which types are revealed and subsequently elaborated at endogenous higher awareness levels. We explore how asymmetric awareness affects budget balance and participation constraints. We show that ex-ante unforeseen contingencies are no excuse for deficits. Finally, we propose a modified reverse second price auction for efficient procurement of complex incompletely specified projects.
Problem
Research questions and friction points this paper is trying to address.
Design efficient mechanisms under asymmetric awareness and information
Implement utilitarian ex-post efficient social choice functions
Address budget balance and participation constraints with unawareness
Innovation
Methods, ideas, or system contributions that make the work stand out.
Dynamic Vickrey-Clarke-Groves mechanisms with awareness elaboration
Utilitarian efficiency without full planner awareness
Modified reverse second price auction for complex projects
🔎 Similar Papers
2024-02-12arXiv.orgCitations: 11
