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A Bayesian implementable social choice function cannot be implemented by a direct mechanism

Author

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  • Wu, Haoyang

Abstract

The revelation principle is a fundamental theorem in many economics fields such as game theory, mechanism design and auction theory etc. In this paper, I construct an example to show that a social choice function which can be implemented in Bayesian Nash equilibrium by an indirect mechanism cannot be implemented by a direct mechanism. The key point is that agents pay cost in the indirect mechanism, but pay nothing in the direct mechanism. As a result, the revelation principle does not hold at all.

Suggested Citation

  • Wu, Haoyang, 2016. "A Bayesian implementable social choice function cannot be implemented by a direct mechanism," MPRA Paper 73660, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:73660
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    More about this item

    Keywords

    Revelation principle; Game theory; Mechanism design; Auction theory;
    All these keywords.

    JEL classification:

    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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