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Ex Post Implementation

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  • Dirk Bergemann
  • Stephen Morris

Abstract

We analyze the problem of fully implementing a social choice set in ex post equilibrium. Weidentify an ex post monotonicity condition that is necessary and -- in economic environments -- sufficient for full implementation in ex post equilibrium. We also identify an ex post monotonicityno veto condition that is sufficient. Ex post monotonicity is satisfied in all single crossing environments with strict ex post incentive constraints. In many economically significant environments, ex post implementation can be achieved in the direct mechanism. We show by means of two classic examples that ex post monotonicity does not imply nor is it implied by Maskin monotonicity (necessary and almost sufficient for complete information implementation). The single unit auction with interdependent valuations is shown to satisfy ex post monotonicity but not Maskin monotonicity. Ex post implementation in the direct mechanism is also possible in this case. We describe an example where the Pareto correspondence fails ex post monotonicity but Maskin monotonicity is satisfied.
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Suggested Citation

  • Dirk Bergemann & Stephen Morris, 2005. "Ex Post Implementation," Levine's Bibliography 784828000000000018, UCLA Department of Economics.
  • Handle: RePEc:cla:levrem:784828000000000018
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    References listed on IDEAS

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    1. Palfrey, Thomas R & Srivastava, Sanjay, 1989. "Implementation with Incomplete Information in Exchange Economies," Econometrica, Econometric Society, vol. 57(1), pages 115-134, January.
    2. Arya, Anil & Glover, Jonathan & Rajan, Uday, 2000. "Implementation in Principal-Agent Models of Adverse Selection," Journal of Economic Theory, Elsevier, vol. 93(1), pages 87-109, July.
    3. Neeman, Zvika, 2004. "The relevance of private information in mechanism design," Journal of Economic Theory, Elsevier, vol. 117(1), pages 55-77, July.
    4. Dirk Bergemann & Stephen Morris, 2005. "Robust Implementation: The Role of Large Type Spaces," Levine's Bibliography 784828000000000116, UCLA Department of Economics.
    5. Dirk Bergemann & Stephen Morris, 2006. "Robust Implementation: The Case of Direct Mechanisms"," Cowles Foundation Discussion Papers 1561R, Cowles Foundation for Research in Economics, Yale University, revised May 2007.
    6. Philippe Jehiel & Moritz Meyer-ter-Vehn & Benny Moldovanu & William R. Zame, 2006. "The Limits of ex post Implementation," Econometrica, Econometric Society, vol. 74(3), pages 585-610, May.
    7. Sjostrom, Tomas & Yamato, Takehiko & Saijo, Tatsuyoshi, 2007. "Secure implementation," Theoretical Economics, Econometric Society, vol. 2(3), September.
    8. Saijo, Tatsuyoshi, 1988. "Strategy Space Reduction in Maskin's Theorem: Sufficient Conditions for Nash Implementation," Econometrica, Econometric Society, vol. 56(3), pages 693-700, May.
    9. Holmstrom, Bengt & Myerson, Roger B, 1983. "Efficient and Durable Decision Rules with Incomplete Information," Econometrica, Econometric Society, vol. 51(6), pages 1799-1819, November.
    10. Dirk Bergemann & Stephen Morris, 2005. "Robust Mechanism Design," Econometrica, Econometric Society, vol. 73(6), pages 1771-1813, November.
    11. Palfrey, Thomas R & Srivastava, Sanjay, 1989. "Mechanism Design with Incomplete Information: A Solution to the Implementation Problem," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 668-691, June.
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    14. Eric Maskin, 1999. "Nash Equilibrium and Welfare Optimality," Review of Economic Studies, Oxford University Press, vol. 66(1), pages 23-38.
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    16. Postlewaite, Andrew & Schmeidler, David, 1986. "Implementation in differential information economies," Journal of Economic Theory, Elsevier, vol. 39(1), pages 14-33, June.
    17. Yokoo, Makoto & Sakurai, Yuko & Matsubara, Shigeo, 2004. "The effect of false-name bids in combinatorial auctions: new fraud in internet auctions," Games and Economic Behavior, Elsevier, vol. 46(1), pages 174-188, January.
    18. Bikhchandani, Sushil, 2006. "Ex post implementation in environments with private goods," Theoretical Economics, Econometric Society, vol. 1(3), pages 369-393, September.
    19. Fieseler, Karsten & Kittsteiner, Thomas & Moldovanu, Benny, 2003. "Partnerships, lemons, and efficient trade," Journal of Economic Theory, Elsevier, vol. 113(2), pages 223-234, December.
    20. Cremer, Jacques & McLean, Richard P, 1985. "Optimal Selling Strategies under Uncertainty for a Discriminating Monopolist When Demands Are Interdependent," Econometrica, Econometric Society, vol. 53(2), pages 345-361, March.
    21. Jackson, Matthew O, 1991. "Bayesian Implementation," Econometrica, Econometric Society, vol. 59(2), pages 461-477, March.
    22. Oleksii Birulin, 2003. "Inefficient ex-post equilibria in efficient auctions," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 22(3), pages 675-683, October.
    23. Maskin, Eric & Sjostrom, Tomas, 2002. "Implementation theory," Handbook of Social Choice and Welfare,in: K. J. Arrow & A. K. Sen & K. Suzumura (ed.), Handbook of Social Choice and Welfare, edition 1, volume 1, chapter 5, pages 237-288 Elsevier.
    24. Dirk Bergemann & Juuso Valimaki, 2002. "Information Acquisition and Efficient Mechanism Design," Econometrica, Econometric Society, vol. 70(3), pages 1007-1033, May.
    25. Sushil Bikhchandani, 2004. "The Limits of Ex Post Implementation Revisited," Levine's Bibliography 122247000000000514, UCLA Department of Economics.
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    Citations

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    Cited by:

    1. Dirk Bergemann & Stephen Morris, 2006. "Robust Implementation: The Case of Direct Mechanisms"," Cowles Foundation Discussion Papers 1561R, Cowles Foundation for Research in Economics, Yale University, revised May 2007.
    2. Renou, Ludovic & Schlag, Karl H., 2010. "Minimax regret and strategic uncertainty," Journal of Economic Theory, Elsevier, vol. 145(1), pages 264-286, January.
    3. Hannu Vartiainen, 2013. "Auction Design Without Commitment," Journal of the European Economic Association, European Economic Association, vol. 11(2), pages 316-342, April.
    4. Rene Saran & Norovsambuu Tumennasan, 2011. "Whose Opinion Counts? Political Processes and the Implementation Problem," Economics Working Papers 2011-06, Department of Economics and Business Economics, Aarhus University.
    5. Ohashi, Yoshihiro, 2012. "Two-person ex post implementation," Games and Economic Behavior, Elsevier, vol. 75(1), pages 435-440.
    6. Philippe Jehiel & Moritz Meyer-ter-Vehn & Benny Moldovanu & William R. Zame, 2005. "Posterior Implementation versus Ex-Post Implementation," Levine's Bibliography 666156000000000556, UCLA Department of Economics.
    7. Bergemann, Dirk & Morris, Stephen, 2011. "Robust implementation in general mechanisms," Games and Economic Behavior, Elsevier, vol. 71(2), pages 261-281, March.
    8. repec:spr:etbull:v:3:y:2015:i:2:d:10.1007_s40505-014-0050-8 is not listed on IDEAS
    9. Jehiel, Philippe & Moldovanu, Benny, 2005. "Allocative and Informational Externalities in Auctions and Related Mechanisms," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 142, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    10. Yu Chen & Zhenhua Wu, 2012. "Delegation Principle for Multi-agency Games under Ex Post Equilibrium," Caepr Working Papers 2012-008, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington.
    11. Ghossoub, Mario, 2010. "Belief heterogeneity in the Arrow-Borch-Raviv insurance model," MPRA Paper 37630, University Library of Munich, Germany, revised 22 Mar 2012.
    12. Barry O'Neill, 2006. "Nuclear Weapons and National Prestige," Cowles Foundation Discussion Papers 1560, Cowles Foundation for Research in Economics, Yale University.
    13. Anil Arya & Joel Demski & Jonathan Glover & Pierre Liang, 2009. "Quasi-Robust Multiagent Contracts," Management Science, INFORMS, vol. 55(5), pages 752-762, May.
    14. Balkenborg, Dieter & Makris, Miltiadis, 2015. "An undominated mechanism for a class of informed principal problems with common values," Journal of Economic Theory, Elsevier, vol. 157(C), pages 918-958.
    15. Hans Peters & Marc Schröder & Dries Vermeulen, 2015. "On existence of ex post Nash consistent representation for effectivity functions," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 45(2), pages 287-307, September.
    16. Beard, Rodney & Mallawaarachchi, Thilak, 2011. "Are international environmental agreements stable ex-post?," MPRA Paper 34303, University Library of Munich, Germany.
    17. Ohashi, Yoshihiro, 2014. "A sufficient condition for two-person ex post implementation in a general environment," Mathematical Social Sciences, Elsevier, vol. 69(C), pages 63-68.
    18. Bikhchandani, Sushil, 2010. "Information acquisition and full surplus extraction," Journal of Economic Theory, Elsevier, vol. 145(6), pages 2282-2308, November.
    19. Eric Maskin, 2008. "Nash Equilibrium and Mechanism Design," Economics Working Papers 0086, Institute for Advanced Study, School of Social Science.
    20. M. Yenmez, 2015. "Incentive compatible market design with applications," International Journal of Game Theory, Springer;Game Theory Society, vol. 44(3), pages 543-569, August.
    21. Saran, Rene & Tumennasan, Norovsambuu, 2013. "Whose opinion counts? Implementation by sortition," Games and Economic Behavior, Elsevier, vol. 78(C), pages 72-84.
    22. repec:inu:caeprp:2012-008 is not listed on IDEAS

    More about this item

    JEL classification:

    • C79 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Other
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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