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How do people design a mechanism? Experimental evidence


Sibly, H and Tisdell, J and Evans, S, How do people design a mechanism? Experimental evidence, Economic Record, 93, (302) pp. 379-394. ISSN 0013-0249 (2017) [Refereed Article]

Copyright Statement

Copyright 2017 Economic Society of Australia

DOI: doi:10.1111/1475-4932.12336


We use an economic experiment to identify how people design a mechanism. Our experimental framework is adapted from the market framework utilised by Maskin and Riley, who considered a monopolist seller of a homogeneous good that uses non-linear pricing under incomplete information. Approximately 30 per cent of participantsí offers in each treatment were incentive-compatible (separating) double offers, a requirement of the optimal mechanism. A similar percentage of offers in each treatment were single (nonseparating) offers, which do not require participants to address incentive compatibility. After sufficient rounds, the design of double offers converged to the schedule identified by Maskin and Riley, while the design of single offers converged to the optimal nonseparating (single) offer.

Item Details

Item Type:Refereed Article
Keywords:market theory, experimental economics
Research Division:Economics
Research Group:Applied economics
Research Field:Experimental economics
Objective Division:Economic Framework
Objective Group:Microeconomics
Objective Field:Industry costs and structure
UTAS Author:Sibly, H (Dr Hugh Sibly)
UTAS Author:Tisdell, J (Professor John Tisdell)
UTAS Author:Evans, S (Mr Shane Evans)
ID Code:116353
Year Published:2017
Deposited By:TSBE
Deposited On:2017-05-08
Last Modified:2018-05-22

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