Better with Byzantine: Manipulation-Optimal Mechanisms

Abstract

A mechanism is manipulable if it is in some agents’ best interest to misrepresent their private information. The revelation principle establishes that, roughly, anything that can be accomplished by a manipulable mechanism can also be accomplished with a truthful mechanism. Yet agents often fail to play their optimal manipulations due to computational limitations or various flavors of incompetence and cognitive biases. Thus, manipulable mechanisms in particular should anticipate byzantine play. We study manipulation-optimal mechanisms: mechanisms that are undominated by truthful mechanisms when agents act fully rationally, and do better than any truthful mechanism if any agent fails to act rationally in any way. This enables the mechanism designer to do better than the revelation principle would suggest, and obviates the need to predict byzantine agents’ irrational behavior. We prove a host of possibility and impossibility results for the concept which have the impression of broadly limiting possibility. These results are largely in line with the revelation principle, although the considerations are more subtle and the impossibility not universal.KeywordsDominant StrategyImpossibility ResultTrue TypeRevelation PrincipleSocial Welfare MaximizationThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.