Contextual Mechanism Design
The context in which a mechanism is defined and meant to operate plays an important role, and in more than one way. We advocate a contextual approach to mechanism design, that extends to both non-classical aspects of decision and of the physical and information-theoretic environment in which the mechanism operates. We demonstrate the approach in two applications: one to auctions with ambiguity, and one to decentralized decision-making.
We are grateful to Adam Brandenburger and Lukasz Swiatczak for valuable comments. Financial support from the German Bundesbank is gratefully acknowledged.
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