Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/157375
Authors: 
Kneeland, Terri
Year of Publication: 
2017
Series/Report no.: 
WZB Discussion Paper SP II 2017-303
Abstract: 
This paper studies mechanism design under the level-k solution concept. The first result gives a general necessary condition for a social choice rule to be level-k implementable. In some environments, this necessary condition is equivalent to Bayesian incentive compatibility, making level-k implementation more restrictive than Bayesian implementation. The second result shows that this is not a general implication. In the bilateral trade environment ex post efficient trade is always possible under level-k implementation. Further, ex post efficient trade is possible in a mechanism that is robust to different specifications of beliefs about the levels of reasoning of others and to any specification of beliefs about payoffs.
Document Type: 
Working Paper

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