We consider mechanism design and redesign for markets like Internet advertising where many frequent, small transactions are organized by a principal. Mechanisms for these markets rarely have truthtelling equilibria. We identify a family of winner-pays-bid mechanisms for such markets that exhibit three properties. First, equilibria in these mechanisms are simple. Second, the mechanisms’ paramete...

Systems wherein strategic agents compete for limited resources are ubiquitous: the economy, computer networks, social networks, congestion networks, nature, etc. Assuming the agents’ preferences are drawn from a distribution, which is a reasonable assumption for small mechanisms in a large system, Bayesian mechanism design governs the design and analysis of these systems. This article surveys t...

We study the design of incentive-compatible mechanisms in general dynamic environments where information arrives gradually over time and decisions are made over multiple periods. Our first main result is a necessary condition for incentive compatibility that takes the form of an envelope formula for the derivative of an agent’s equilibrium expected payoff with respect to his current type. It co...

We introduce a model in which agents face random and unobservable needs to transact over time. We characterize the optimal setup for incentive compatible transactions, the optimal payment system. The existence of an equilibrium in which agents transact through a payment system might require certain caps on short-term borrowing. Networks that have knowledge of agents’ histories support efficient...

Mechanism design experiments bridge the gap between a theoretical mechanism and an actual economic process. In the domain of public goods, matching and combinatorial auctions, laboratory experiments identify features of mechanisms which lead to good performance when implemented among boundedly rational agents. These features include dynamic stability and security in public goods mechanisms, tra...

The setup is similar to that of a Bayesian game. The ingredients are: 1. denote a typical type of player i. (q (m) , t (m)). All of these are to be chosen by the mechanism designer. We call the pair Γ = (M, φ) a mechanism. We will consider dominant strategy equilibria in these Bayesian games as well as Bayesian Nash equilibria. Whichever solution concept we adopt, we call φ (m) = (q (m) , t (m)...

Computational mechanism design brings together the concern in microeconomics with decision making in the context of distributed private information and self-interest and the concern in computer science with computational and communication complexity. In constructing mechanisms, with application to the design of electronic markets and to protocols for automated negotiation, many new issues arise...

We introduce intention-based social preferences into a mechanism design framework with independent private values and quasilinear payoffs. For the case where the designer has no information about the intensity of social preferences, we provide conditions under which mechanisms which have been designed under the assumption that agents are selfish can still be implemented. For the case where prec...

We prove a general possibility result for collective decision problems where individual allocations are one-dimensional, preferences are single-peaked (strictly convex), and feasible allocation profiles cover a closed convex set. Special cases include the celebrated median voter theorem ([10], [21]) and the division of a non disposable commodity by the uniform rationing rule ([47]). We construc...