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Secure Implementation:Strategy-Proof Mechanisms Reconsidered

  • Tatsuyoshi Saijo
  • Tomas Sjostrom
  • Takehiko Yamato

Strategy-proofness, requiring that truth-telling is a dominant strategy, is a standard concept in social choice theory. However, the concept of strategy-proofness has serious drawbacks. First, announcing one's true preference may not be a unique dominant strategy, and using the wrong dominant strategy may lead to the wrong outcome. Second, almost all strategy-proof mechanisms have a continuum of Nash equilibria, and some of which produce the wrong outcome. Third, experimental evidence shows that most of the strategy-proof mechanisms do not work well. We argue that a possible solution to this dilemma is to require double implementation in Nash equilibrium and in dominant strategies, which we call secure implementation. We characterize environments where secure implementation is possible, and compare it with dominant strategy implementation. An interesting example of secure implementation is a Groves mechanism when preferences are single-peaked.

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Paper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion papers with number 03019.

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Length: 31 pages
Date of creation: Sep 2003
Date of revision:
Handle: RePEc:eti:dpaper:03019
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  1. Kawagoe, Toshiji & Mori, Toru, 2001. " Can the Pivotal Mechanism Induce Truth-Telling? An Experimental Study," Public Choice, Springer, vol. 108(3-4), pages 331-54, September.
  2. H. Moulin, 1980. "On strategy-proofness and single peakedness," Public Choice, Springer, vol. 35(4), pages 437-455, January.
  3. Schummer, James & Vohra, Rakesh V., 2002. "Strategy-proof Location on a Network," Journal of Economic Theory, Elsevier, vol. 104(2), pages 405-428, June.
  4. Kagel, John H & Levin, Dan, 1993. "Independent Private Value Auctions: Bidder Behaviour in First-, Second- and Third-Price Auctions with Varying Numbers of Bidders," Economic Journal, Royal Economic Society, vol. 103(419), pages 868-79, July.
  5. Moulin, Herve, 1994. "Serial Cost-Sharing of Excludable Public Goods," Review of Economic Studies, Wiley Blackwell, vol. 61(2), pages 305-25, April.
  6. Barbera, S & Masso, J & Serizawa, S, 1996. "Strategy-Proof Voting on Compact Ranges," UFAE and IAE Working Papers 358.96, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  7. Tatsuyoshi Saijo & Tomas Sjöström & Takehiko Yamato, 2004. "Secure Implementation," Levine's Bibliography 122247000000000615, UCLA Department of Economics.
  8. 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).
  9. Border, Kim C & Jordan, J S, 1983. "Straightforward Elections, Unanimity and Phantom Voters," Review of Economic Studies, Wiley Blackwell, vol. 50(1), pages 153-70, January.
  10. Attiyeh, Greg & Franciosi, Robert & Isaac, R Mark, 2000. " Experiments with the Pivot Process for Providing Public Goods," Public Choice, Springer, vol. 102(1-2), pages 95-114, January.
  11. Laura Razzolini & Michael Reksulak & Robert Dorsey, 2007. "An Experimental Evaluation of the Serial Cost Sharing Rule," Theory and Decision, Springer, vol. 63(3), pages 283-314, November.
  12. Repullo, Rafael, 1985. "Implementation in Dominant Strategies under Complete and Incomplete Information," Review of Economic Studies, Wiley Blackwell, vol. 52(2), pages 223-29, April.
  13. Mookherjee, Dilip & Reichelstein, Stefan, 1990. "Implementation via Augmented Revelation Mechanisms," Review of Economic Studies, Wiley Blackwell, vol. 57(3), pages 453-75, July.
  14. Kagel, John H & Harstad, Ronald M & Levin, Dan, 1987. "Information Impact and Allocation Rules in Auctions with Affiliated Private Values: A Laboratory Study," Econometrica, Econometric Society, vol. 55(6), pages 1275-1304, November.
  15. Moulin, Herve & Shenker, Scott, 1992. "Serial Cost Sharing," Econometrica, Econometric Society, vol. 60(5), pages 1009-37, September.
  16. Groves, Theodore, 1973. "Incentives in Teams," Econometrica, Econometric Society, vol. 41(4), pages 617-31, July.
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