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Collusive dominant-strategy truthfulness


  • Chen, Jing
  • Micali, Silvio


We show that collusion and wrong beliefs may cause a dramatic efficiency loss in the Vickrey mechanism for auctioning a single good in limited supply. We thus put forward a new mechanism guaranteeing efficiency in a very adversarial collusion model, where the players can partition themselves into arbitrarily many coalitions, exchange money with each other, and perfectly coordinate their actions. Our mechanism bypasses classic impossibility results (such as those of Green and Laffont, and of Schummer) by providing the players with a richer set of strategies, making it dominant for every coalition C to instruct each of its members to report truthfully not only his own valuation, but also his belonging to C. Our mechanism is coalitionally rational, which implies being individually rational for independent players.

Suggested Citation

  • Chen, Jing & Micali, Silvio, 2012. "Collusive dominant-strategy truthfulness," Journal of Economic Theory, Elsevier, vol. 147(3), pages 1300-1312.
  • Handle: RePEc:eee:jetheo:v:147:y:2012:i:3:p:1300-1312 DOI: 10.1016/j.jet.2012.01.021

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    References listed on IDEAS

    1. Moulin, H. & Peleg, B., 1982. "Cores of effectivity functions and implementation theory," Journal of Mathematical Economics, Elsevier, vol. 10(1), pages 115-145, June.
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    5. Jackson Matthew O. & Palfrey Thomas R. & Srivastava Sanjay, 1994. "Undominated Nash Implementation in Bounded Mechanisms," Games and Economic Behavior, Elsevier, vol. 6(3), pages 474-501, May.
    6. Barbera, Salvador & Jackson, Matthew O, 1995. "Strategy-Proof Exchange," Econometrica, Econometric Society, vol. 63(1), pages 51-87, January.
    7. Jean-Jacques Laffont & David Martimort, 2000. "Mechanism Design with Collusion and Correlation," Econometrica, Econometric Society, vol. 68(2), pages 309-342, March.
    8. Jerry Green & Jean-Jacques Laffont, 1979. "On Coalition Incentive Compatibility," Review of Economic Studies, Oxford University Press, vol. 46(2), pages 243-254.
    9. Edward Clarke, 1971. "Multipart pricing of public goods," Public Choice, Springer, vol. 11(1), pages 17-33, September.
    10. Abreu, Dilip & Matsushima, Hitoshi, 1992. "A Response [Virtual Implementation in Iteratively Undominated Strategies I: Complete Information]," Econometrica, Econometric Society, vol. 60(6), pages 1439-1442, November.
    11. Suh, Sang-Chul, 1996. "Implementation with coalition formation: A complete characterization," Journal of Mathematical Economics, Elsevier, vol. 26(4), pages 409-428.
    12. Schummer, James, 2000. "Manipulation through Bribes," Journal of Economic Theory, Elsevier, vol. 91(2), pages 180-198, April.
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    14. William Vickrey, 1961. "Counterspeculation, Auctions, And Competitive Sealed Tenders," Journal of Finance, American Finance Association, vol. 16(1), pages 8-37, March.
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    16. HervÊ Moulin, 1999. "Incremental cost sharing: Characterization by coalition strategy-proofness," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 16(2), pages 279-320.
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    Cited by:

    1. repec:eee:gamebe:v:103:y:2017:i:c:p:83-93 is not listed on IDEAS
    2. Anil Chorppath & Tansu Alpcan & Holger Boche, 2015. "Adversarial Behavior in Network Games," Dynamic Games and Applications, Springer, vol. 5(1), pages 26-64, March.
    3. Mikhail Safronov, 2016. "A Coasian Approach to Efficient Mechanism Design," Cambridge Working Papers in Economics 1619, Faculty of Economics, University of Cambridge.
    4. Jing Chen & Silvio Micali, 2016. "Leveraging Possibilistic Beliefs in Unrestricted Combinatorial Auctions," Games, MDPI, Open Access Journal, vol. 7(4), pages 1-19, October.
    5. Aryal, Gaurab & Gabrielli, Maria F., 2012. "Is Collusion Proof Auction Expensive? Estimates from Highway Procurements," MPRA Paper 57353, University Library of Munich, Germany, revised 19 Feb 2014.
    6. Gradwohl, Ronen & Reingold, Omer, 2014. "Fault tolerance in large games," Games and Economic Behavior, Elsevier, vol. 86(C), pages 438-457.

    More about this item


    Vickrey auctions; Collusion; Efficiency;

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General


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