informs ® doi 10.1287/mnsc.1050.0379

Online reputation mechanisms need honest feedback to function effectively. Self interested agents report the truth only when explicit rewards offset the cost of reporting and the potential gains that can be obtained from lying. Side-payment schemes (monetary rewards for submitted feedback) can make truth-telling rational based on the correlation between the reports of different buyers. In this paper we use the idea of automated mechanism design to construct the payments that minimize the budget required by an incentive-compatible reputation mechanism. Such payment schemes are defined by a linear optimization problem that can be solved efficiently in realistic settings. Furthermore, we investigate two directions for further lowering the cost of incentive-compatibility: using several reference reports to construct the side-payments, and filtering out reports that are probably false.

In a differential information economy with quasi-linear utilities, monetary transfers facilitate the fulfillment of incentive compatibility constraints: the associated ex ante core is generically nonempty. However, we exhibit a well-behaved exchange economy in which this core is empty, even if goods are allocated through random mechanisms.

Abstract not found

Online reputation mechanisms need honest feedback to function effectively. Self-interested agents report the truth only when explicit rewards offset the potential gains obtained from lying. Feedback payment schemes (monetary rewards for submitted feedback) can make truth-telling rational based on the correlation between the reports of different buyers. In this paper we investigate incentive-compatible payment mechanisms that are also resistant to collusion: groups of agents cannot collude on a lying strategy without suffering monetary losses. We analyze several scenarios, where, for example, some or all of the agents collude. For each scenario we investigate both existential and implementation problems. Throughout the paper we use automated mechanism design to compute the best possible mechanism for a given setting.

We present a new condition on beliefs that guarantee the Bayesian implementability of all efficient social decision rules. We show that this condition is easy to verify and is both more interpretable and more general than the conditions that are found in the literature. We also study conditions guaranteeing the Bayesian implementability of all social decision rules with balanced budget mechanisms.

In a di#erential information economy ith quasi-linear utilities, monetary transfers facilitate the fulfillment of incentive compatibility constraints: the associated ex ante core is generically non-empty. Ho ever, e exhibit a ellbehaved exchange economy in hich this core is empty, even if goods are allocated through random mechanisms. THE EX ANTE INCENTIVE COMPATIBLE CORE IN THE ABSENCE OF WEALTH EFFECTS # FRAN COISE FORGE + , JEluq RAN COISME TEu # , AND RAJIV VOHRA 2000 MathematicsS ubject Classification. 91A12, 91B44, 91B60 JE Classification numbers. C71, D82, D51. Key words and phrases. Core, exchange economy, asymmetric information, incentive compatibility, ex ante, transferable utility, absence of wealth e#ects, quasi-linear. URL: ftp://jfm.core.ucl.ac.be/pub/papers/ICCore.ps.gz http://econ.pstc.brown.edu/~rvohra/papers/wp2001-01.pdf. # We wish t thankE nric Minelli f r numer us, extremely useful discussi ns n the t pic f this research. Als c nversati ns with Claude d'Asprem nt, Andy P stlewaite, R y Radner, Debraj Ray and R bert Serran have been very helpful. Financial supp rt fr mE ur pean TMR Netw rk FMRX CT 960055 and fr m a Sal m n research grant, Br wn University, is gratefully ackn wledged, as well as fr m the Belgian Pr gramme n Interuniversity P les f Attracti n, initiated by the Belgian State, Prime Minister's O#ce. +THEud Universite de Cergy-P nt ise, et Institut Universitaire de France. E-mail: forges@u-cergy.fr. #CORE Universite Cath lique de L uvain; 34, V ie du R man-Pays; B-1348 L uvain-la-Neuve; Belgique. E-mail: jfm@core.ucl.ac.be. Br wn University, Pr vidence, R.I. 02912, U.S.A. E-mail: Rajiv_Vohra@brown.edu. THE INCENTIVE COMPATIBLE CORE 1 1.

We consider the robustness of extensive form mechanisms when common knowledge of the state of Nature is relaxed to common p-beliefs about it. We show that with even an arbitrarily small amount of such uncertainty, the Moore-Repullo mechanism does not yield (even approximately) truthful revelation and in addition there are sequential equilibria with undesirable outcomes. More generally, we show that any extensive form mechanism is fragile in the sense that if a non-monotonic social objective can be implemented with this mechanism, then there are arbitrarily small common p-belief value perturbations under which an undesirable sequential equilibrium exists. 1

We consider the mechanism design problem when agents ’ types are multidimensional and continuous, and their valuations are interdependent. If there are at least three agents whose types satisfy a weak correlation condition, then for any decision rule and any ε>0 there exist balanced transfers that render truthful revelation a Bayesian ε-equilibrium. A slightly stronger correlation condition ensures that there exist balanced transfers that induce a Bayesian Nash equilibrium in which agents ’ strategies are nearly truthful.

with interdependent private information