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Robust Mechanism Design

  • Dirk Bergemann
  • Stephen Morris

The mechanism design literature assumes too much common knowledge of the environment among the players and planner. We relax this assumption by studying implementation on richer type spaces. We ask when ex post implementation is equivalent to interim (or Bayesian) implementation for all possible type spaces. The equivalence holds in the case of separable environments; examples of separable environments arise (1) when the planner is implementing a social choice function (not correspondence); and (2) in a quasilinear environment with no restrictions on transfers. The equivalence fails in general, including in some quasilinear environments with budget balance. In private value environments, ex post implementation is equivalent to dominant strategies implementation. The private value versions of our results offer new insights into the relation between dominant strategy implementation and Bayesian implementation.

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Paper provided by www.najecon.org in its series NajEcon Working Paper Reviews with number 666156000000000593.

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Date of creation: 10 Mar 2005
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Handle: RePEc:cla:najeco:666156000000000593
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