STRATEGICALLY SIMPLE MECHANISMS

We define and investigate a property of mechanisms that we
call “strategic simplicity,” and that is meant to capture the idea that, in
strategically simple mechanisms, strategic choices are easy. We define a
mechanism to be strategically simple if strategic choices can be based on
first-order beliefs about the other agents’ preferences alone, and there is
no need for agents to form higher-order beliefs, because such beliefs are
irrelevant to agents’ optimal choices. All dominant strategy mechanisms
are strategically simple. But many more mechanisms are strategically
simple. In particular, strategically simple mechanisms may be more
flexible than dominant strategy mechanisms in the voting problem and
the bilateral trade problem.