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Mechanism design and communication networks

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  • 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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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, 1994. "The firm as a communication network," ULB Institutional Repository 2013/9595, ULB -- Universite Libre de Bruxelles.
  2. 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.
  3. Dirk Bergemann & Stephen Morris, 2009. "Robust Implementation in Direct Mechanisms," Levine's Working Paper Archive 814577000000000109, David K. Levine.
  4. Dirk Bergemann & Stephen Morris, 2003. "Robust Mechanism Design," Cowles Foundation Discussion Papers 1421, Cowles Foundation for Research in Economics, Yale University.
  5. FORGES, Françoise, . "Universal mechanisms," CORE Discussion Papers RP -914, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  6. 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.
  7. 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.
  8. Maskin, Eric & Sjostrom, Tomas, 2001. "Implementation Theory," Working Papers 5-01-1, Pennsylvania State University, Department of Economics.
  9. Salanié, Bernard, 2011. "The Economics of Taxation," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262016346, December.
  10. 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.
  11. 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.
  12. Jackson, Matthew O, 1991. "Bayesian Implementation," Econometrica, Econometric Society, vol. 59(2), pages 461-77, March.
  13. Harris Milton & Townsend, Robert M, 1981. "Resource Allocation under Asymmetric Information," Econometrica, Econometric Society, vol. 49(1), pages 33-64, January.
  14. Gibbard, Allan, 1973. "Manipulation of Voting Schemes: A General Result," Econometrica, Econometric Society, vol. 41(4), pages 587-601, July.
  15. Roger B. Myerson, 1977. "Incentive Compatability and the Bargaining Problem," Discussion Papers 284, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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Citations

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

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