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Implementation with Transfers

Author

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  • Chen, Yi-Chun
  • Kunimoto, Takashi
  • Sun, Yifei

Abstract

We say that a social choice rule is implementable with (small) transfers if one can design a mechanism whose set of equilibrium outcomes coincides with that specified by the rule but the mechanism allows for (small) ex post transfers among the players. We then show in private-value environments that any incentive compatible rule is implementable with small transfers. Therefore, our mechanism only needs small ex post transfers to make our implementation results completely free from the multiple equilibrium problem. In addition, our mechanism possesses the unique equilibrium that is robust to higher-order belief perturbations. We also identify a class of interdependent-value environments to which our results can be extended.

Suggested Citation

  • Chen, Yi-Chun & Kunimoto, Takashi & Sun, Yifei, 2015. "Implementation with Transfers," Discussion Papers 2015-04, Graduate School of Economics, Hitotsubashi University.
  • Handle: RePEc:hit:econdp:2015-04
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    File URL: http://hermes-ir.lib.hit-u.ac.jp/rs/bitstream/10086/27159/1/070econDP15-04.pdf
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    References listed on IDEAS

    as
    1. Serrano, Roberto & Vohra, Rajiv, 2005. "A characterization of virtual Bayesian implementation," Games and Economic Behavior, Elsevier, vol. 50(2), pages 312-331, February.
    2. Yi‐Chun Chen & Siyang Xiong, 2013. "Genericity and Robustness of Full Surplus Extraction," Econometrica, Econometric Society, vol. 81(2), pages 825-847, March.
    3. Matsushima, Hitoshi, 1988. "A new approach to the implementation problem," Journal of Economic Theory, Elsevier, vol. 45(1), pages 128-144, June.
    4. Marion Oury & Olivier Tercieux, 2012. "Continuous Implementation," Econometrica, Econometric Society, vol. 80(4), pages 1605-1637, July.
    5. Kim-Sau Chung & Jeffrey C. Ely, 2003. "Implementation with Near-Complete Information," Econometrica, Econometric Society, vol. 71(3), pages 857-871, May.
    6. Martin J. Osborne & Ariel Rubinstein, 1994. "A Course in Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262650401, March.
    7. Rafael Repullo, 1985. "Implementation in Dominant Strategies under Complete and Incomplete Information," Review of Economic Studies, Oxford University Press, vol. 52(2), pages 223-229.
    8. Artemov, Georgy & Kunimoto, Takashi & Serrano, Roberto, 2013. "Robust virtual implementation: Toward a reinterpretation of the Wilson doctrine," Journal of Economic Theory, Elsevier, vol. 148(2), pages 424-447.
    9. Abreu, Dilip & Matsushima, Hitoshi, 1992. "Virtual Implementation in Iteratively Undominated Strategies: Complete Information," Econometrica, Econometric Society, vol. 60(5), pages 993-1008, September.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Holden, Richard T. & Fudenberg, Drew & Aghion, Philippe, 2009. "Subgame Perfect Implementation with Almost Perfect Information and the Hold-Up Problem," Scholarly Articles 3708929, Harvard University Department of Economics.
    2. Mikhail Safronov, 2016. "A Coasian Approach to Efficient Mechanism Design," Cambridge Working Papers in Economics 1619, Faculty of Economics, University of Cambridge.
    3. Philippe Aghion & Drew Fudenberg & Richard Holden & Takashi Kunimoto & Olivier Tercieux, 2012. "Subgame-Perfect Implementation Under Information Perturbations," The Quarterly Journal of Economics, Oxford University Press, vol. 127(4), pages 1843-1881.
    4. Chen, Yi-Chun & Sun, Yifei, 2015. "Full implementation in backward induction," Journal of Mathematical Economics, Elsevier, vol. 59(C), pages 71-76.
    5. repec:eee:jetheo:v:177:y:2018:i:c:p:659-677 is not listed on IDEAS

    More about this item

    Keywords

    Full implementation; universal type space; robustness; transfers;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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