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Contents : John Ledyard Caltech A Behavioral Model for Mechanism Design: IEL (with Jasmina Arifovic) We describe a new and different behavioral model for individuals playing in a repeated situation. It is based on a flexible learning process and called Individual Evolutionary Learning. IEL does not require calibration and can be used as a computer testbed to study the probable performance of a wide range of mechanisms over a wide range of environments prior to testing them in a laboratory or using them in practice. We illustrate the utility of the testbed approach by analyzing an open question in mechanism design the dynamics of Groves-Ledyard mechanisms. Contrary to standard theories the prediction from the IEL behavioral model is that the average time to convergence varies smoothly and is U-shaped in the mechanism's free parameter. We validate the results from the testbed with data from economic experiments with humans.

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