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How do people design a mechanism? Experimental evidence

journal contribution
posted on 2023-05-19, 04:28 authored by Sibly, H, Tisdell, J, Evans, S
We use an economic experiment to identify how people design a mechanism. Our experimental framework is adapted from the market framework utilised by Maskin and Riley, who considered a monopolist seller of a homogeneous good that uses non-linear pricing under incomplete information. Approximately 30 per cent of participants’ offers in each treatment were incentive-compatible (separating) double offers, a requirement of the optimal mechanism. A similar percentage of offers in each treatment were single (nonseparating) offers, which do not require participants to address incentive compatibility. After sufficient rounds, the design of double offers converged to the schedule identified by Maskin and Riley, while the design of single offers converged to the optimal nonseparating (single) offer.

History

Publication title

Economic Record

Volume

93

Issue

302

Pagination

379-394

ISSN

0013-0249

Department/School

TSBE

Publisher

Wiley-Blackwell Publishing Asia

Place of publication

Australia

Rights statement

Copyright 2017 Economic Society of Australia

Repository Status

  • Restricted

Socio-economic Objectives

Industry costs and structure

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    University Of Tasmania

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