Example Application of the b-Core: Buyer Coalition Problem with Beliefs - Belief-based Stability in Coalition Formation with Uncertainty - page 131

Problem with Beliefs

5.2.5 On Mechanism Design

We conclude this section with a brief note on the principle of mecha-
nism design [14].
In game theory, the idea of mechanism design is to determine the
rules of a game, so that the achieved outcomes, assuming that the
players are all completely rational and have su cient resources for
computation, have some desired properties, which in our case is sta-
bility of coalitions.
In mechanism design the agents are assumed to be self-interested,
so the goal is to design a mechanism such that the desired properties
can still be achieved even if each agent act selfishly to achieve their
own goals only. Ideally, this is done by having in the game incentive
compatible strategies that can achieve the desired goal (a strategy is
said to be incentive compatible if it is to the agents' own benefit to
adopt that strategy).
In the subsequent sections, we will follow the mechanism design
principle by first proposing a mechanism that can achieve our goal
(stability) provided the agents follow certain strategies, then we will
provide preliminary evidence, by means of experiments, that it is in-
centive compatible to follow the proposed strategy, where we show that
our proposed strategy is the best one to follow amongst a number of
reasonable approaches.

5.3 A Distributed Mechanism

In this section, we describe a distributed mechanism for the buyer
coalition formation problem. The mechanism itself is described below
in the following subsection. After that, some agents' strategies is pro-
posed.