Mechanism Design with Moral Bidders. Dr. Sigal Oren (BGU).

Title:  Mechanism Design with Moral Bidders

Abstract:
A rapidly growing literature on lying in behavioral economics and psychology shows that individuals often do not lie even when lying maximizes their utility. In this work, we attempt to incorporate these findings into the theory of mechanism design. We consider players that have a preference for truth-telling, and will only lie if their benefit from lying is sufficiently larger than the loss of the others. To accommodate such players, we introduce α-moral mechanisms, in which the gain of a player from misreporting his true value, compared to truth-telling, is at most α fraction of the loss that the others incur due to misreporting.
We develop a theory of moral mechanisms in the canonical setting of single-item auctions. We identify similarities and disparities to the standard theory of truthful mechanisms. In particular, we show that the auctioneer can take advantage of the players’ preference for truth-telling when the values of the players are correlated, even when there are only two players. In contrast, we show that truthful mechanisms are optimal even among moral ones when the values of the players are independently drawn from certain identical distributions (e.g., the uniform and exponential distributions). A by-product of the latter proof is an alternative proof to Myerson’s optimal truthful mechanism characterization in the settings that we consider.

Joint work with Shahar Dobzinski

Short Bio:

Sigal Oren is a senior lecturer (a.k.a Assistant Professor) at the Computer Science department of Ben-Gurion University. Prior to that, she was a post-doctoral fellow at the Hebrew University and Microsoft Research. She obtained her BSc from the Department of Computer Science at the Technion. Sigal earned her PhD in computer science from Cornell University in 2013, under the supervision of Jon Kleinberg. During her graduate studies, Sigal was a Microsoft Research PhD fellow. Her dissertation has won an honorable mention for the SIGecom Doctoral Dissertation Award.

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