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Mechanism design and communication networks

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Author Info

  • Tomala, Tristan

    ()

  • Renou, Ludovic

    ()

Abstract

This paper studies a mechanism design model where the players and the designer are nodes in a communication network. The authors characterize the communication networks (directed graphs) for which, in any environment (utilities and beliefs), every incentive compatible social choice function is implementable. They show that any incentive compatible social choice function is implementable on a given communication network, in all environments with either common independent beliefs and private values or a worst outcome, if and only if the network is strongly connected and weakly 2-connected. A network is strongly connected if for each player, there exists a directed path to the designer. It is weakly 2-connected if each player is either directly connected to the designer or indirectly connected to the designer through two disjoint paths, not necessarily directed. They couple encryption techniques together with appropriate incentives to secure the transmission of each player’s private information to the designer.

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Bibliographic Info

Paper provided by HEC Paris in its series Les Cahiers de Recherche with number 926.

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Length: 65 pages
Date of creation: 05 Jan 2010
Date of revision:
Handle: RePEc:ebg:heccah:0926

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Postal: HEC Paris, 78351 Jouy-en-Josas cedex, France
Web page: http://www.hec.fr/
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Related research

Keywords: Mechanism design; incentives; Bayesian equilibrium; communication networks; encryption; secure transmission;

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References

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  1. Mathias Dewatripont & Patrick Bolton, 1996. "The firm as a communication network," ULB Institutional Repository 2013/9597, ULB -- Universite Libre de Bruxelles.
  2. Jackson, Matthew O, 1991. "Bayesian Implementation," Econometrica, Econometric Society, vol. 59(2), pages 461-77, March.
  3. Bergemann, Dirk & Stephen Morris, 2006. "Robust Implementation in Direct Mechanisms," Cowles Foundation Discussion Papers 1561RR, Cowles Foundation for Research in Economics, Yale University, revised Jan 2009.
  4. Forges, F., 1987. "Universal mechanisms," CORE Discussion Papers 1987004, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  5. Maskin, Eric & Sjostrom, Tomas, 2001. "Implementation Theory," Working Papers 5-01-1, Pennsylvania State University, Department of Economics.
  6. Stephen Morris & Dirk Bergemann, 2004. "Robust Mechanism Design," Yale School of Management Working Papers ysm380, Yale School of Management.
  7. Myerson, Roger B, 1979. "Incentive Compatibility and the Bargaining Problem," Econometrica, Econometric Society, vol. 47(1), pages 61-73, January.
  8. Roberto Serrano & Rajiv Vohra, 2009. "Multiplicity of mixed equilibria in mechanisms: A unified approach to exact and approximate implementation," Working Papers 2009-08, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales.
  9. Harris Milton & Townsend, Robert M, 1981. "Resource Allocation under Asymmetric Information," Econometrica, Econometric Society, vol. 49(1), pages 33-64, January.
  10. Dasgupta, Partha S & Hammond, Peter J & Maskin, Eric S, 1979. "The Implementation of Social Choice Rules: Some General Results on Incentive Compatibility," Review of Economic Studies, Wiley Blackwell, vol. 46(2), pages 185-216, April.
  11. Gibbard, Allan, 1973. "Manipulation of Voting Schemes: A General Result," Econometrica, Econometric Society, vol. 41(4), pages 587-601, July.
  12. Dino Gerardi, 2002. "Unmediated Communication in Games with Complete and Incomplete Information," Cowles Foundation Discussion Papers 1371, Cowles Foundation for Research in Economics, Yale University.
  13. Nisan, Noam & Segal, Ilya, 2006. "The communication requirements of efficient allocations and supporting prices," Journal of Economic Theory, Elsevier, vol. 129(1), pages 192-224, July.
  14. Timothy Van Zandt, 2007. "Communication Complexity and Mechanism Design," Journal of the European Economic Association, MIT Press, vol. 5(2-3), pages 543-553, 04-05.
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Citations

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Cited by:
  1. Mohamed Belhaj & Sebastian Bervoets & Frédéric Deroïan, 2013. "Network Design under Local Complementarities," AMSE Working Papers 1309, Aix-Marseille School of Economics, Marseille, France, revised 12 Feb 2013.
  2. Mohamed Belhaj & Sebastian Bervoets & Frédéric Deroïan, 2013. "Network Design under Local Complementarities," Working Papers halshs-00796487, HAL.
  3. Pinghan Liang, 2010. "Transfer of Authority within Hierarchy," Levine's Working Paper Archive 661465000000000139, David K. Levine.

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