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Robust Implementation in Direct Mechanisms

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  • Dirk Bergemann
  • Stephen Morris

Abstract

A social choice function is robustly implementable if there is a mechanism under which the process of iteratively eliminating strictly dominated messages lead to outcomes that agree with the social choice function for all beliefs at every type profile. In an interdependent-value environment with single-crossing preferences, we identify a contraction property on the preferences which together with strict ex post incentive compatibility is sufficient to guarantee robust implementation in the direct mechanism. Strict ex post incentive compatibility and the contraction property are also necessary for robust implementation in any mechanism, including indirect ones. The contraction property requires that the interdependence is not too high. In a linear signal model, the contraction property is equivalent to an interdependence matrix having all eigenvalues smaller than one. Copyright 2009, Wiley-Blackwell.

Suggested Citation

  • Dirk Bergemann & Stephen Morris, 2009. "Robust Implementation in Direct Mechanisms," Review of Economic Studies, Oxford University Press, vol. 76(4), pages 1175-1204.
  • Handle: RePEc:oup:restud:v:76:y:2009:i:4:p:1175-1204
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    File URL: http://hdl.handle.net/10.1111/j.1467-937X.2009.00553.x
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