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Mechanism Design and Communication Networks

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  • Ludovic Renou
  • Tristan Tomala

Abstract

This paper characterizes the class of communication networks for which, in any environment (utilities and beliefs), every incentive-compatible social choice function is (partially) implementable. Among others, in environments with either common and independent beliefs and private values or a bad outcome, we show that if the communication network is 2-connected, then any incentive-compatible social choice function is implementable. A network is 2-connected if each player is either directly connected to the designer or indirectly connected to the designer through at least two disjoint paths. We couple encryption techniques together with appropriate incentives to secure the transmission of each player’s private information to the designer.

Suggested Citation

  • Ludovic Renou & Tristan Tomala, 2008. "Mechanism Design and Communication Networks," Discussion Papers in Economics 08/35, Division of Economics, School of Business, University of Leicester.
    • Handle: RePEc:lec:leecon:08/35
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    File URL: https://www.le.ac.uk/economics/research/RePEc/lec/leecon/dp08-35.pdf
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    References listed on IDEAS

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    1. Dirk Bergemann & Stephen Morris, 2012. "Robust Implementation in Direct Mechanisms," World Scientific Book Chapters, in: Robust Mechanism Design The Role of Private Information and Higher Order Beliefs, chapter 4, pages 153-194, World Scientific Publishing Co. Pte. Ltd..
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    Citations

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    Cited by:

    1. Marie Laclau & Ludovic Renou & Xavier Venel, 2020. "Robust communication on networks," Papers 2007.00457, arXiv.org, revised Oct 2020.
    2. Rivera, Thomas J., 2018. "Incentives and the structure of communication," Journal of Economic Theory, Elsevier, vol. 175(C), pages 201-247.
    3. Larionov, Daniil & Pham, Hien & Yamashita, Takuro & Zhu, Shuguang, 2021. "First Best Implementation with Costly Information Acquisition," TSE Working Papers 21-1261, Toulouse School of Economics (TSE), revised Apr 2022.
    4. Peters, Michael & Troncoso-Valverde, Cristián, 2013. "A folk theorem for competing mechanisms," Journal of Economic Theory, Elsevier, vol. 148(3), pages 953-973.
    5. Renault, Jérôme & Renou, Ludovic & Tomala, Tristan, 2014. "Secure message transmission on directed networks," Games and Economic Behavior, Elsevier, vol. 85(C), pages 1-18.
    6. Mohamed Belhaj & Sebastian Bervoets & Frédéric Deroïan, 2013. "Network Design under Local Complementarities," Working Papers halshs-00796487, HAL.
    7. Rene Saran & Norovsambuu Tumennasan, 2015. "Implementation by Sortition in Nonexclusive Information Economies," Economics Working Papers 2015-13, Department of Economics and Business Economics, Aarhus University.
    8. Zhu, Shuguang, 2023. "Private disclosure with multiple agents," Journal of Economic Theory, Elsevier, vol. 212(C).
    9. Pinghan Liang, 2010. "Transfer of Authority within Hierarchy," Levine's Working Paper Archive 661465000000000139, David K. Levine.
    10. Marie Laclau & Ludovic Renou & Xavier Venel, 2024. "Communication on networks and strong reliability," Working Papers hal-03099678, HAL.

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    More about this item

    Keywords

    Mechanism design; incentives; Bayesian equilibrium; communication networks; encryption; secure transmission; coding;
    All these keywords.

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

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