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Rodrigo A. Velez

Publications and source records attributed to Rodrigo A. Velez.

10 recordsLinked to original sources
arXiv2026

Lies, Labels, and Mechanisms

We test whether lying aversion can steer equilibrium selection in mechanism design. In a principal-worker environment, the direct mechanism admits two dominant-strategy equilibria: the designer's target and a worker-optimal outcome. We show this limitation persists for all robust mechanisms, then ask whether framing misreports as explicit lies helps. We develop a 2X2 experiment that varies direct vs. extended mechanisms with implicit vs. explicit messages. We find that framing misreporting of type as an explicit lie shifts play away from the worker-optimal outcome toward truthful reporting, raising designer payoffs with minimal efficiency loss. These findings indicate that lying aversion is an effective lever for aligning behavior with social objectives.

econ.GN↗
arXiv2024

Testing the simplicity of strategy-proof mechanisms

This paper experimentally evaluates four mechanisms intended to achieve the Uniform outcome in rationing problems (Sprumont, 1991). Our benchmark is the dominant-strategy, direct-revelation mechanism of the Uniform rule. A strategically equivalent mechanism that provides non-binding feedback during the reporting period greatly improves performance. A sequential revelation mechanism produces modest improvements despite not possessing dominant strategies. A novel, obviously strategy-proof mechanism, devised by Arribillaga et al. (2023), does not improve performance. We characterize each alternative to the direct mechanism, finding general lessons about the advantages of real-time feedback and sequentiality of play as well as the potential shortcomings of an obviously strategy-proof mechanism.

econ.TH↗
arXiv2021

Balanced House Allocation

We introduce balancedness a fairness axiom in house allocation problems. It requires a mechanism to assign the top choice, the second top choice, and so on, on the same number of profiles for each agent. This axiom guarantees equal treatment of all agents at the stage in which the mechanism is announced when all preference profiles are equally likely. We show that, with an interesting exception for the three-agent case, Top Trading Cycles from individual endowments is the only mechanism that is balanced, efficient, and group strategy-proof.

econ.TH↗
arXiv2020

Empirical Equilibrium

We study the foundations of empirical equilibrium, a refinement of Nash equilibrium that is based on a non-parametric characterization of empirical distributions of behavior in games (Velez and Brown,2020b arXiv:1907.12408). The refinement can be alternatively defined as those Nash equilibria that do not refute the regular QRE theory of Goeree, Holt, and Palfrey (2005). By contrast, some empirical equilibria may refute monotone additive randomly disturbed payoff models. As a by product, we show that empirical equilibrium does not coincide with refinements based on approximation by monotone additive randomly disturbed payoff models, and further our understanding of the empirical content of these models.

econ.EM↗
arXiv2020

Empirical bias and efficiency of alpha-auctions: experimental evidence

We experimentally evaluate the comparative performance of the winner-bid, average-bid, and loser-bid auctions for the dissolution of a partnership. The analysis of these auctions based on the empirical equilibrium refinement of Velez and Brown (2020) arXiv:1907.12408 reveals that as long as behavior satisfies weak payoff monotonicity, winner-bid and loser-bid auctions necessarily exhibit a form of bias when empirical distributions of play approximate best responses (Velez and Brown, 2020 arXiv:1905.08234). We find support for both weak payoff monotonicity and the form of bias predicted by the theory for these two auctions. Consistently with the theory, the average-bid auction does not exhibit this form of bias. It has lower efficiency that the winner-bid auction, however.

econ.GN↗
arXiv2020

Empirical bias of extreme-price auctions: analysis

We advance empirical equilibrium analysis (Velez and Brown, 2020, arXiv:1907.12408) of the winner-bid and loser-bid auctions for the dissolution of a partnership. We show, in a complete information environment, that even though these auctions are essentially equivalent for the Nash equilibrium prediction, they can be expected to differ in fundamental ways when they are operated. Besides the direct policy implications, two general consequences follow. First, a mechanism designer who accounts for the empirical plausibility of equilibria may not be constrained by Maskin invariance. Second, a mechanism designer who does not account for the empirical plausibility of equilibria may inadvertently design biased mechanisms.

econ.TH↗
arXiv2020

Empirical strategy-proofness

We study the plausibility of sub-optimal Nash equilibria of the direct revelation mechanism associated with a strategy-proof social choice function. By using the recently introduced empirical equilibrium analysis (Velez and Brown, 2019, arXiv:1804.07986) we determine that this behavior is plausible only when the social choice function violates a non-bossiness condition and information is not interior. Analysis of the accumulated experimental and empirical evidence on these games supports our findings.

econ.TH↗
arXiv2020

Expressive mechanisms for equitable rent division on a budget

We study the incentive properties of envy-free mechanisms for the allocation of rooms and payments of rent among financially constrained roommates. Each agent reports her values for rooms, her housing earmark (soft budget), and an index that reflects the difficulty the agent experiences from having to pay over this amount. Then an envy-free allocation for these reports is recommended. The complete information non-cooperative outcomes of each of these mechanisms are exactly the envy-free allocations with respect to true preferences if and only if the admissible budget violation indices have a bound.

econ.TH↗
arXiv2020

A polynomial algorithm for maxmin and minmax envy-free rent division on a soft budget

The current practice of envy-free rent division, lead by the fair allocation website Spliddit, is based on quasi-linear preferences. These preferences rule out agents' well documented financial constraints. To resolve this issue we consider piece-wise linear budget constrained preferences. These preferences admit differences in agents' marginal disutility of paying rent below and above a given reference, i.e., a soft budget. We construct a polynomial algorithm to calculate a maxmin utility envy-free allocation, and other related solutions, in this domain.

cs.GT↗