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Secure Implementation Experiments: Do Strategy-proof Mechanisms Really Work?

  • Cason, Timothy N.

    (Purdue U)

  • Saijo, Tatsuyoshi

    (Osaka U)

  • Sjostrom, Tomas

    (Pennsylvania State U)

  • Yamato, Takehiko

    (Tokyo Institute of Technology)

Strategy-proofness, requiring that truth-telling is a dominant strategy, is a standard concept used in social choice theory. Saijo et al. (2003) argue that this concept has serious drawbacks. In particular, announcing one's true preference may not be a unique dominant strategy, and almost all strategy-proof mechanisms have a continuum of Nash equilibria. For only a subset of strategy-proof mechanisms do the set of Nash equilibria and the set of dominant strategy equilibria coincide. For example, this double coincidence occurs in the Groves mechanism when preferences are single-peaked. We report experiments using two strategy-proof mechanisms where one of them has a large number of Nash equilibria, but the other has a unique Nash equilibrium. We found clear differences in the rate of dominant strategy play between the two.

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Paper provided by Pennsylvania State University, Department of Economics in its series Working Papers with number 4-03-1.

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Date of creation: Apr 2003
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Handle: RePEc:ecl:peneco:4-03-1
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