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

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  • Tatsuyoshi Saijo
  • Timothy N. Cason
  • Tomas Sjostrom

Abstract

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. Journal of Economic Literature Classification Number: C92, D71, D78, and H41.

Suggested Citation

  • Tatsuyoshi Saijo & Timothy N. Cason & Tomas Sjostrom, 2003. "Secure Implementation Experiments:Do Strategy-proof Mechanisms Really Work?," Discussion papers 03012, Research Institute of Economy, Trade and Industry (RIETI).
    • Handle: RePEc:eti:dpaper:03012
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    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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