Research Article
The Power of Weak Incentives
@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
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%.
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