The Power of Weak Incentives

Hector Lopez Carbajal

The Third Conference on Auctions, Market Mechanisms and Their Applications

Research Article

The Power of Weak Incentives

Cite: BibTeX Plain Text

@INPROCEEDINGS{10.4108/eai.8-8-2015.2260763,
    author={Hector Lopez Carbajal},
    title={The Power of Weak Incentives},
    proceedings={The Third Conference on Auctions, Market Mechanisms and Their Applications},
    publisher={ACM},
    proceedings_a={AMMA},
    year={2015},
    month={8},
    keywords={weak incentives behavioral implementation congestion pricing},
    doi={10.4108/eai.8-8-2015.2260763}
}

Hector Lopez Carbajal
Year: 2015
The Power of Weak Incentives
AMMA
ICST
DOI: 10.4108/eai.8-8-2015.2260763

Hector Lopez Carbajal¹^,*

1: University of Maryland, College Park

*Contact email: hectorarturolc@yahoo.com

Abstract

A mechanism in weak incentives offers every agent the same outcome regardless of their reported type. In such a mechanism, reporting the truth or any misrepresentation guarantees the same payoff. Actual reports depend on human behavior. This paper shows that, for a large class of behavioral assumptions, mechanisms in weak incentives can solve externality problems in large economies. An experiment was used to test the effectiveness of a mechanism in weak incentives using a congestion game. In the laboratory, the mechanism achieved an efficiency of 95%.

Keywords: weak incentives behavioral implementation congestion pricing

Published: 2015-08-13
Publisher: ACM

: http://dx.doi.org/10.4108/eai.8-8-2015.2260763