Incentive Compatibility in Two-Stage Repeated Stochastic Games

by   Bharadwaj Satchidanandan, et al.

We address the problem of mechanism design for two-stage repeated stochastic games – a novel setting using which many emerging problems in next-generation electricity markets can be readily modeled. Repeated playing affords the players a large class of strategies that adapt a player's actions to all past observations and inferences obtained therefrom. In other settings such as iterative auctions or dynamic games where a large strategy space of this sort manifests, it typically has an important implication for mechanism design: It may be impossible to obtain truth-telling as a dominant strategy equilibrium. Consequently, in such scenarios, it is common to settle for mechanisms that render truth-telling only a Nash equilibrium, or variants thereof, even though Nash equilibria are known to be poor models of real-world behavior owing to each player having to make overly specific assumptions about the behaviors of the other players in order for them to employ their Nash equilibrium strategy. In general, the lesser the burden of speculation in an equilibrium, the more plausible it is that it models real-world behavior. Guided by this maxim, we introduce a new notion of equilibrium called Dominant Strategy Non-Bankrupting Equilibrium (DNBE) which requires the players to make very little assumptions about the behavior of the other players to employ their equilibrium strategy. Consequently, a mechanism that renders truth-telling a DNBE as opposed to only a Nash equilibrium could be quite effective in molding real-world behavior along the desired lines. Finally, we present a mechanism for two-stage repeated stochastic games that renders truth-telling a Dominant Strategy Non-Bankrupting Equilibrium. The mechanism also guarantees individual rationality and maximizes social welfare.


page 1

page 2

page 3

page 4


Stochastic Potential Games

Computing the Nash equilibrium (NE) for N-player non-zerosum stochastic ...

Bayesian Opponent Modeling in Multiplayer Imperfect-Information Games

In many real-world settings agents engage in strategic interactions with...

Empirical strategy-proofness

We study the plausibility of sub-optimal Nash equilibria of the direct r...

Egoistic Incentives Based on Zero-Determinant Alliances for Large-Scale Systems

Social dilemmas exist in various fields and give rise to the so-called f...

Strategy-proof Budgeting via a VCG-like Mechanism

We present a strategy-proof public goods budgeting mechanism where agent...

Non-Myopic Learning in Repeated Stochastic Games

This paper addresses learning in repeated stochastic games (RSGs) played...

Please sign up or login with your details

Forgot password? Click here to reset