Revenue Guarantee Equivalence between Dominant-Strategy and Bayesian Mechanisms

Nir Bachrach; Yi-Chun Chen; Inbal Talgam-Cohen; Xiangqian Yang; Wanchang Zhang

Home/Archive/arXiv

arXiv · 2610.29208

Revenue Guarantee Equivalence between Dominant-Strategy and Bayesian Mechanisms

Nir Bachrach·Yi-Chun Chen·Inbal Talgam-Cohen·Xiangqian Yang·Wanchang Zhang

View original source ↗Read source document ↗Export metadata ↓

Abstract

In auction design with limited information about bidders' value distributions, we provide an optimality foundation for dominant-strategy mechanisms. We show that simple dominant-strategy incentive compatible (DIC) mechanisms--either a second-price auction with a random reserve or the standard second-price auction without a reserve--achieve a revenue guarantee equal to the worst-case optimal revenue attainable by Bayesian incentive compatible (BIC) mechanisms, thereby establishing a robust form of DIC-BIC equivalence.

Explore related subjects

econ.TH

Keep this discovery

Explore connections, maps & timelines

BibTeX RIS

Nir Bachrach, Yi-Chun Chen, Inbal Talgam-Cohen, Xiangqian Yang, Wanchang Zhang. 2026-10-21. Revenue Guarantee Equivalence between Dominant-Strategy and Bayesian Mechanisms. https://arxiv.org/abs/2610.29208

Cite the original work for its findings. Save a collection to share your selection of sources.

KEEP EXPLORING

Related papers

arXiv2026

Learning in a Small/Big World

Complexity and limited ability affect how we learn and make decisions under uncertainty. Using finite automata to model belief formation, this paper studies the characteristics of optimal learning behavior in small and big worlds, where the complexity of the environment is low and high, respectively, relative to the cognitive ability of the decision maker. The optimal long-run average payoff and distribution of actions are well approximated by the Bayesian benchmark in very small worlds, but the gap widens as the worlds get bigger. In big worlds, it can be optimal for the decision maker to ignore some states entirely, concentrating limited cognitive resources on a subset of states. This ``optimal ignorance'' is reminiscent of well-documented non-Bayesian learning patterns such as the use of heuristics, correlation neglect, and inattentive learning. The results establish a relationship between complexity, cognitive ability, and the scope for non-Bayesian learning behavior.

econ.TH↗

arXiv2026

A measure of choice irrationality based on opposite judgements

In many choice settings the decision maker (DM) adopts a criterion which is a mediation between her preference and its opposite. According to such compromise, the first i alternatives on top of the DM's taste are evaluated according to its negation. This pattern allows to define the compromise-based degree of irrationality, which quantifies the extent of the mediation embraced by the DM in her choice. Necessary and sufficient conditions characterizing this index are singled out. I investigate non rationalizable choices that display the lowest degree of irrationality, and I fully identify the preferences that explain the DM's picks by a minimal mediation between opposite judgments. These datasets account for some well known selection biases, such as second-best procedures, and the handicapped avoidance. I offer a simple characterization of the choice behavior that exhibits the most severe compromise, and I show that this subclass comprises almost all choices. Finally, some alternative measures of compromise are proposed, and compared with the score previously determined.

econ.TH↗

arXiv2026

Centripetal Structure under Alienation-Based Abstention

Alienation-based abstention makes participation endogenous because the platforms chosen by parties determine who votes. We study how voter tolerance affects the existence, location, and persistence of pure-strategy equilibria in two versions of a two-party spatial model. In the first, office-seeking parties maximize voter plurality; in the second, they care about the policy implemented. We characterize all office-seeking equilibria through a condition called window dominance, which gives a distributional characterisation of profitable deviations both near to and far from a party's platform. For general continuous voter distributions, pure strategy equilibrium in the office seeking game may fail to exist, may be non-unique, and may appear and disappear as tolerance increases. To resolve this, we identify a centripetal structure in the set of positions that can not lose to each rival. When this structure holds, a single anchor defeats every other platform and determines the unique office-seeking equilibrium. The classical Downs and Llavador results are special cases. We show that this structure persists at all larger tolerance radii once it holds at a radius of at least half the policy space and at least twice the median's distance from the center. The centripetal structure emerges before full participation for all voter distributions. Finally, the same structure yields a complete classification of equilibrium when parties care about the policy implemented rather than electoral victory alone.

econ.TH↗