Strategy-proofness, requiring that truth-telling is a dominant strategy, is a standard concept in social choice theory. However, the concept of strategy-proofness has serious drawbacks. First, announcing one's true preference may not be a unique dominant strategy, and using the wrong dominant strategy may lead to the wrong outcome. second, almost all strategy-proof mechanisms have a continuum of Nash equilibria, most of which produce the wrong outcome. Third, experimental evidence shows that most of the strategy-proof mechanisms do not work well. We argue that a possible solution to this dilemma is to require double implementation in Nash equilibrium and in dominant strategies, which we call secure implementation. We characterize environments where secure implementation is possible, and compare it with dominant strategy implementation. An interesting example of secure implementation is a Groves mechanism when preferences are single-peaked.
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Paper provided by Pennsylvania State University, Department of Economics in its series Working Papers with number
9-03-1.
Find related papers by JEL classification: C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
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Tatsuyoshi Saijo & Tomas Sjostrom & Takehiko Yamato, 2005.
"Secure Implementation,"
Economics Working Papers
0056, Institute for Advanced Study, School of Social Science.
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Tatsuyoshi Saijo & Tomas Sjöström & Takehiko Yamato, 2004.
"Secure Implementation,"
Levine's Bibliography
122247000000000615, UCLA Department of Economics.
[Downloadable!]
Sjostrom, Tomas & Yamato, Takehiko & Saijo, Tatsuyoshi, 2007.
"Secure implementation,"
Theoretical Economics,
Society for Economic Theory, vol. 2(3), pages 203-229, September.
[Downloadable!]
James Schummer & Rakesh V. Vohra, 1999.
"Strategy-proof Location on a Network,"
Discussion Papers
1253, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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