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Strategic Distinguishability With an Application to Robust Virtual Implementation

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  • Stephen Morris
  • Dirk Bergemann

Abstract

In a general interdependent preference environment, we characterize when two payoff types can be distinguished by their rationalizable strategic choices without any prior knowledge of their beliefs and higher order beliefs. We show that two types are strategically distinguishable if and only if they satisfy a separability condition. The separability condition for each agent essentially requires that there is not too much interdependence in preferences across agents. A social choice function -- mapping payoff type profiles to outcomes -- can be robustly virtually implemented if there exists a mechanism such that every equilibrium on every type space achieves an outcome arbitrarily close to the social choice function: this definition is equivalent to requiring virtual implementation in iterated deletion of strategies that are strictly dominated for all beliefs. The social choice function is robustly measurable if strategically indistinguishable types receive the same allocation. We show that ex post incentive compatibility and robust measurability are necessary and sufficient for robust virtual implementation.
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Suggested Citation

  • Stephen Morris & Dirk Bergemann, 2007. "Strategic Distinguishability With an Application to Robust Virtual Implementation," Levine's Bibliography 843644000000000149, UCLA Department of Economics.
  • Handle: RePEc:cla:levrem:843644000000000149
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    File URL: http://cowles.econ.yale.edu/P/cd/d16a/d1609.pdf
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    References listed on IDEAS

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    1. Dirk Bergemann & Stephen Morris, 2005. "Robust Implementation: The Role of Large Type Spaces," Levine's Bibliography 784828000000000116, UCLA Department of Economics.
    2. Abreu, Dilip & Matsushima, Hitoshi, 1992. "Virtual Implementation in Iteratively Undominated Strategies: Complete Information," Econometrica, Econometric Society, vol. 60(5), pages 993-1008, September.
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    Cited by:

    1. Georgy Artemov & Takashi Kunimoto & Roberto Serrano, 2007. "Robust Virtual Implementation with Incomplete Information: Toward a Reinterpretation of the Wilson Doctrine," Working Papers 2007-6, Brown University, Department of Economics.
    2. Dirk Bergemann & Stephen Morris, 2008. "The Role of the Common Prior in Robust Implementation," Journal of the European Economic Association, MIT Press, vol. 6(2-3), pages 551-559, 04-05.
    3. Dirk Bergemann & Stephen Morris, 2007. "Belief Free Incomplete Information Games," Cowles Foundation Discussion Papers 1629, Cowles Foundation for Research in Economics, Yale University.
    4. Gul, Faruk & Pesendorfer, Wolfgang, 2016. "Interdependent preference models as a theory of intentions," Journal of Economic Theory, Elsevier, vol. 165(C), pages 179-208.

    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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