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Secure implementation experiments: Do strategy-proof mechanisms really work?

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  • Cason, Timothy N.
  • Saijo, Tatsuyoshi
  • Sjostrom, Tomas
  • Yamato, Takehiko

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.
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  • Cason, Timothy N. & Saijo, Tatsuyoshi & Sjostrom, Tomas & Yamato, Takehiko, 2006. "Secure implementation experiments: Do strategy-proof mechanisms really work?," Games and Economic Behavior, Elsevier, vol. 57(2), pages 206-235, November.
  • Handle: RePEc:eee:gamebe:v:57:y:2006:i:2:p:206-235
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    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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