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Robust Implementation in Direct Mechanisms

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  • Dirk Bergemann
  • Stephen Morris

Abstract

A social choice function is robustly implementable if there is a mechanism under which the process of iteratively eliminating strictly dominated messages lead to outcomes that agree with the social choice function for all beliefs at every type profile. In an interdependent-value environment with single-crossing preferences, we identify a contraction property on the preferences which together with strict ex post incentive compatibility is sufficient to guarantee robust implementation in the direct mechanism. Strict ex post incentive compatibility and the contraction property are also necessary for robust implementation in any mechanism, including indirect ones. The contraction property requires that the interdependence is not too high. In a linear signal model, the contraction property is equivalent to an interdependence matrix having all eigenvalues smaller than one. Copyright 2009, Wiley-Blackwell.

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Bibliographic Info

Article provided by Oxford University Press in its journal The Review of Economic Studies.

Volume (Year): 76 (2009)
Issue (Month): 4 ()
Pages: 1175-1204

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Handle: RePEc:oup:restud:v:76:y:2009:i:4:p:1175-1204

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  1. Dirk Bergemann & Stephen Morris, 2007. "The Role of the Common Prior in Robust Implementation," Levine's Bibliography 122247000000001574, UCLA Department of Economics.
  2. Dirk Bergemann & Stephen Morris, 2007. "An Ascending Auction for Interdependent Values: Uniqueness and Robustness to Strategic Uncertainty," Levine's Bibliography 321307000000001000, UCLA Department of Economics.
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  12. Kim-Sau Chung & Jeffrey C. Ely, 2000. "Efficient and Dominance Solvable Auctions with Interdependent Valuations," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 1313, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  13. Philippe Jehiel & Moritz Meyer-ter-Vehn & Benny Moldovanu & William R. Zame, 2006. "The Limits of ex post Implementation," Econometrica, Econometric Society, Econometric Society, vol. 74(3), pages 585-610, 05.
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Citations

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Cited by:
  1. Yi-Chun Chen & Alfredo Di Tillio & Eduardo Faingold & Siyang Xiong, 2012. "The Strategic Impact of Higher-Order Beliefs," Cowles Foundation Discussion Papers, Cowles Foundation for Research in Economics, Yale University 1875, Cowles Foundation for Research in Economics, Yale University.
  2. Diego Moreno & María Moscoso, 2013. "Strategy-proof allocation mechanisms for economies with public goods," Economic Theory, Springer, Springer, vol. 52(1), pages 315-336, January.
  3. Ludovic Renou & Tristan Tomala, 2008. "Mechanism Design and Communication Networks," Discussion Papers in Economics, Department of Economics, University of Leicester 08/35, Department of Economics, University of Leicester.
  4. Hernández, Penélope & Muñoz-Herrera, Manuel & Sánchez, Ángel, 2013. "Heterogeneous network games: Conflicting preferences," Games and Economic Behavior, Elsevier, Elsevier, vol. 79(C), pages 56-66.
  5. Felix Bierbrauer & Martin Hellwig, 2011. "Mechanism Design and Voting for Public-Good Provision," Working Paper Series of the Max Planck Institute for Research on Collective Goods, Max Planck Institute for Research on Collective Goods 2011_31, Max Planck Institute for Research on Collective Goods.
  6. Dirk Bergemann & Stephen Morris, 2010. "Robust Implementation in General Mechanisms," Levine's Working Paper Archive 661465000000000017, David K. Levine.
  7. Jehiel, Philippe & Meyer-ter-Vehn, Moritz & Moldovanu, Benny, 2012. "Locally robust implementation and its limits," Journal of Economic Theory, Elsevier, Elsevier, vol. 147(6), pages 2439-2452.
  8. Tilman Borgers & Doug Smith, 2012. "Robustly Ranking Mechanisms," American Economic Review, American Economic Association, American Economic Association, vol. 102(3), pages 325-29, May.
  9. Carrasco, Vinicius & Salgado, Pablo, 2014. "Coordinated strategic defaults and financial fragility in a costly state verification model," Journal of Financial Intermediation, Elsevier, Elsevier, vol. 23(1), pages 129-139.
  10. Mathevet, Laurent & Taneva, Ina, 2013. "Finite supermodular design with interdependent valuations," Games and Economic Behavior, Elsevier, Elsevier, vol. 82(C), pages 327-349.
  11. Meyer-ter-Vehn, Moritz & Morris, Stephen, 2011. "The robustness of robust implementation," Journal of Economic Theory, Elsevier, Elsevier, vol. 146(5), pages 2093-2104, September.
  12. Di Tillio, Alfredo, 2011. "A robustness result for rationalizable implementation," Games and Economic Behavior, Elsevier, Elsevier, vol. 72(1), pages 301-305, May.
  13. Beard, Rodney & Mallawaarachchi, Thilak, 2011. "Are international environmental agreements stable ex-post?," MPRA Paper 34303, University Library of Munich, Germany.
  14. Kyungmin Kim & Antonio Penta, 2012. "A Robustly Efficient Auction," Carlo Alberto Notebooks, Collegio Carlo Alberto 248, Collegio Carlo Alberto.

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