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Robust Implementation in Direct Mechanisms

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Author Info
Bergemann, Dirk () (Cowles Foundation, Yale University)
Stephen Morris (Dept. of Economics, Princeton University)

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Abstract

A social choice function is robustly implementable if there is a mechanism under which the process of iteratively eliminating strictly dominated messages leads 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 large. In a linear signal model, the contraction property is equivalent to an interdependence matrix having all eigenvalues smaller than one.

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File URL: http://cowles.econ.yale.edu/P/cd/d15b/d1561-rr.pdf
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Publisher Info
Paper provided by Cowles Foundation, Yale University in its series Cowles Foundation Discussion Papers with number 1561RR.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 39 pages
Date of creation: Mar 2006
Date of revision: Jan 2009
Publication status: Published in Review of Economic Studies (2009), 76: 1175-1204
Handle: RePEc:cwl:cwldpp:1561rr

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Postal: Yale University, Box 208281, New Haven, CT 06520-8281 USA
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Web page: http://cowles.econ.yale.edu/
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Postal: Cowles Foundation, Yale University, Box 208281, New Haven, CT 06520-8281 USA

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Related research
Keywords: Mechanism design; Implementation; Robustness; Common knowledge; Interim equilibrium; Iterative deletion; Direct mechanism;

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References listed on IDEAS
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  1. Palfrey, Thomas R & Srivastava, Sanjay, 1989. "Implementation with Incomplete Information in Exchange Economies," Econometrica, Econometric Society, vol. 57(1), pages 115-34, January. [Downloadable!] (restricted)
  2. Postlewaite, Andrew & Schmeidler, David, 1986. "Implementation in differential information economies," Journal of Economic Theory, Elsevier, vol. 39(1), pages 14-33, June. [Downloadable!] (restricted)
  3. Milgrom, Paul & Roberts, John, 1990. "Rationalizability, Learning, and Equilibrium in Games with Strategic Complementarities," Econometrica, Econometric Society, vol. 58(6), pages 1255-77, November. [Downloadable!] (restricted)
  4. Piketty, Thomas, 1999. "The information-aggregation approach to political institutions," European Economic Review, Elsevier, vol. 43(4-6), pages 791-800, April. [Downloadable!] (restricted)
  5. Bikhchandani, Sushil, 2006. "Ex post implementation in environments with private goods," Theoretical Economics, Society for Economic Theory, vol. 1(3), pages 369-393, September. [Downloadable!]
  6. Partha Dasgupta & Eric Maskin, 2000. "Efficient Auctions," The Quarterly Journal of Economics, MIT Press, vol. 115(2), pages 341-388, May. [Downloadable!] (restricted)
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  7. Philippe Jehiel & Moritz Meyer-ter-Vehn & Benny Moldovanu & William R. Zame, 2006. "The Limits of ex post Implementation," Econometrica, Econometric Society, vol. 74(3), pages 585-610, 05. [Downloadable!] (restricted)
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  8. Fieseler, Karsten & Kittsteiner, Thomas & Moldovanu, Benny, 2003. "Partnerships, lemons, and efficient trade," Journal of Economic Theory, Elsevier, vol. 113(2), pages 223-234, December. [Downloadable!] (restricted)
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  9. Dirk Bergemann & Stephen Morris, 2007. "Strategic Distinguishability and Robust Virtual Implementation," Cowles Foundation Discussion Papers 1609R, Cowles Foundation, Yale University, revised Apr 2008. [Downloadable!]
  10. Bernheim, B Douglas, 1984. "Rationalizable Strategic Behavior," Econometrica, Econometric Society, vol. 52(4), pages 1007-28, July. [Downloadable!] (restricted)
  11. Dirk Bergemann & Juuso Valimaki, 2002. "Information Acquisition and Efficient Mechanism Design," Econometrica, Econometric Society, vol. 70(3), pages 1007-1033, May. [Downloadable!] (restricted)
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  12. 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. [Downloadable!]
  13. Pearce, David G, 1984. "Rationalizable Strategic Behavior and the Problem of Perfection," Econometrica, Econometric Society, vol. 52(4), pages 1029-50, July. [Downloadable!] (restricted)
  14. Jackson, Matthew O, 1991. "Bayesian Implementation," Econometrica, Econometric Society, vol. 59(2), pages 461-77, March. [Downloadable!] (restricted)
  15. repec:bep:theadv:v:3:y:2003:i:1:p:1073-1073 is not listed on IDEAS
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  16. Hong, Han & Shum, Matthew, 2003. "Econometric models of asymmetric ascending auctions," Journal of Econometrics, Elsevier, vol. 112(2), pages 327-358, February. [Downloadable!] (restricted)
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  17. Dirk Bergemann & Stephen Morris, 2008. "The Role of the Common Prior in Robust Implementation," Journal of the European Economic Association, MIT Press, vol. 6(2-3), pages 551-559, 04-05. [Downloadable!] (restricted)
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  18. Brandenburger, Adam & Dekel, Eddie, 1987. "Rationalizability and Correlated Equilibria," Econometrica, Econometric Society, vol. 55(6), pages 1391-1402, November. [Downloadable!] (restricted)
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