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Secure Implementation Experiments:Do Strategy-proof Mechanisms Really Work?

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  • Tatsuyoshi Saijo
  • Timothy N. Cason
  • Tomas Sjostrom

Abstract

Strategy-proofness, requiring that truth-telling is a dominant strategy, is a standard concept used in social choice theory. Saijo et al. (2003) argue that this concept has serious drawbacks. In particular, announcing one's true preference may not be a unique dominant strategy, and almost all strategy-proof mechanisms have a continuum of Nash equilibria. For only a subset of strategy-proof mechanisms do the set of Nash equilibria and the set of dominant strategy equilibria coincide. For example, this double coincidence occurs in the Groves mechanism when preferences are single-peaked. We report experiments using two strategy-proof mechanisms where one of them has a large number of Nash equilibria, but the other has a unique Nash equilibrium. We found clear differences in the rate of dominant strategy play between the two. Journal of Economic Literature Classification Number: C92, D71, D78, and H41.

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Paper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion papers with number 03012.

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Length: 48 pages
Date of creation: May 2003
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Handle: RePEc:eti:dpaper:03012

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