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Payoff equivalence between Bayesian and ex post individually rational dominant strategy mechanisms


  • Georgia Kosmopoulou

    () (Department of Economics, University of Oklahoma, 729 Elm Avenue, Norman, OK 73019-2103, USA)


An efficient, interim individually rational, ex post budget balanced Bayesian mechanism is shown to be payoff equivalent to an ex post individually rational and ex ante budget balanced dominant strategy mechanism. This result simplifies the search for mechanisms that implement efficient allocation rules by pointing to a class of Groves mechanisms. It eliminates the strict requirement of common knowledge of priors and can be applied to many problems of incomplete information.

Suggested Citation

  • Georgia Kosmopoulou, 1999. "Payoff equivalence between Bayesian and ex post individually rational dominant strategy mechanisms," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 13(1), pages 229-237.
  • Handle: RePEc:spr:joecth:v:13:y:1999:i:1:p:229-237 Note: Received: October 22 1996; revised version: November 25, 1997

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    References listed on IDEAS

    1. Viral Acharya & Jing-zhi Huang & Marti Subrahmanyam & Rangarajan Sundaram, 2006. "When does Strategic Debt-service Matter?," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 29(2), pages 363-378, October.
    2. Hart, O. & Moore, J., 1989. "Default And Renegotiation: A Dynamic Model Of Debt," Working papers 520, Massachusetts Institute of Technology (MIT), Department of Economics.
    3. Mella-Barral, Pierre & Perraudin, William, 1997. " Strategic Debt Service," Journal of Finance, American Finance Association, vol. 52(2), pages 531-556, June.
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    Cited by:

    1. Stefano Galavotti, 2008. "On Efficient Trading Mechanisms with Ex-Post Individually Rational Traders," Working Papers 161, Department of Applied Mathematics, Università Ca' Foscari Venezia.
    2. Schweizer, Urs, 2006. "Universal possibility and impossibility results," Games and Economic Behavior, Elsevier, vol. 57(1), pages 73-85, October.

    More about this item


    Allocative efficiency · Bayesian incentive compatible mechanisms · Dominant strategy implementation · Payoff equivalence.;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D7 - Microeconomics - - Analysis of Collective Decision-Making


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