arXiv · 2606.29010
Pure Nash Equilibria under the Affine Mechanism: A Potential Game of Exaggeration
Abstract
The mean mechanism is known to be non-incentive-compatible, namely, rational players are incentivized to misreport their values. Despite this game-theoretic issue, the mean mechanism is prevalent in practice due to its other desirable properties. We give a full characterization of pure Nash equilibria--how the players will misreport--for the affine mechanism, of which the mean is a special case. Furthermore, we characterize both complete-information and Bayesian games under the affine mechanism. Our results highlight the inevitability of extreme exaggeration in such games.
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Jason Jisen Li, Young Wu, Yancheng Zhu, Jin-yi Cai, Xiaojin Zhu. 2026-06-27. Pure Nash Equilibria under the Affine Mechanism: A Potential Game of Exaggeration. https://arxiv.org/abs/2606.29010
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