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Implementation, Verification, and Detection

Listed author(s):
  • Hitoshi Matsushima

    (Faculty of Economics, The University of Tokyo)

We investigate implementation of social choice functions, where we make severe restrictions on mechanisms such as detail-freeness, boundedness, only tiny transfers permitted, and uniqueness of iteratively undominated strategy profile in the ex-post term. After the determination of allocation, some partial information about the state becomes verifiable. The central planner can make the transfers contingent on this information. By demonstrating a sufficient condition for implementation, namely full detection, we show that a wide variety of social choice functions are uniquely implementable even if the range of players’ lies that the verified information can directly detect is quite narrow. With full detection, we can detect all possible lies, not by the verified information alone, but by processing a chain of detection triggered by this information. The designed mechanism is sequential in that each player makes announcements twice at two distinct stages. This paper does not assume expected utility, quasi-linearity, and risk neutrality.

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File URL: http://www.cirje.e.u-tokyo.ac.jp/research/dp/2015/2015cf991.pdf
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Paper provided by CIRJE, Faculty of Economics, University of Tokyo in its series CIRJE F-Series with number CIRJE-F-991.

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Length: 48 pages
Date of creation: Sep 2015
Handle: RePEc:tky:fseres:2015cf991
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  1. Moore, John & Repullo, Rafael, 1988. "Subgame Perfect Implementation," Econometrica, Econometric Society, vol. 56(5), pages 1191-1220, September.
  2. Rahul Deb & Debasis Mishra, 2014. "Implementation With Contingent Contracts," Econometrica, Econometric Society, vol. 82, pages 2371-2393, November.
  3. Matsushima, Hitoshi, 2008. "Role of honesty in full implementation," Journal of Economic Theory, Elsevier, vol. 139(1), pages 353-359, March.
  4. Grossman, Sanford J, 1981. "The Informational Role of Warranties and Private Disclosure about Product Quality," Journal of Law and Economics, University of Chicago Press, vol. 24(3), pages 461-483, December.
  5. Matsushima, Hitoshi, 1988. "A new approach to the implementation problem," Journal of Economic Theory, Elsevier, vol. 45(1), pages 128-144, June.
  6. Hansen, Robert G, 1985. "Auctions with Contingent Payments," American Economic Review, American Economic Association, vol. 75(4), pages 862-865, September.
  7. Eric Maskin, 1999. "Nash Equilibrium and Welfare Optimality," Review of Economic Studies, Oxford University Press, vol. 66(1), pages 23-38.
  8. Peter M. DeMarzo & Ilan Kremer & Andrzej Skrzypacz, 2005. "Bidding with Securities: Auctions and Security Design," American Economic Review, American Economic Association, vol. 95(4), pages 936-959, September.
  9. Abreu Dilip & Matsushima Hitoshi, 1994. "Exact Implementation," Journal of Economic Theory, Elsevier, vol. 64(1), pages 1-19, October.
  10. Abreu, Dilip & Sen, Arunava, 1991. "Virtual Implementation in Nash Equilibrium," Econometrica, Econometric Society, vol. 59(4), pages 997-1021, July.
  11. Matsushima, Hitoshi, 2008. "Behavioral aspects of implementation theory," Economics Letters, Elsevier, vol. 100(1), pages 161-164, July.
  12. Moulin, Herve, 1979. "Dominance Solvable Voting Schemes," Econometrica, Econometric Society, vol. 47(6), pages 1137-1151, November.
  13. Palfrey, Thomas R & Srivastava, Sanjay, 1991. "Nash Implementation Using Undominated Strategies," Econometrica, Econometric Society, vol. 59(2), pages 479-501, March.
  14. Martin J. Osborne & Ariel Rubinstein, 1994. "A Course in Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262650401, January.
  15. Gabriel Carroll, 2015. "Robustness and Linear Contracts," American Economic Review, American Economic Association, vol. 105(2), pages 536-563, February.
  16. Ben-Porath, Elchanan & Lipman, Barton L., 2012. "Implementation with partial provability," Journal of Economic Theory, Elsevier, vol. 147(5), pages 1689-1724.
  17. Colin F. Camerer & Howard Kunreuther, 1989. "Decision processes for low probability events: Policy implications," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 8(4), pages 565-592.
  18. Bergemann, Dirk & Morris, Stephen, 2009. "Robust virtual implementation," Theoretical Economics, Econometric Society, vol. 4(1), March.
  19. Claudio Mezzetti, 2004. "Mechanism Design with Interdependent Valuations: Efficiency," Econometrica, Econometric Society, vol. 72(5), pages 1617-1626, September.
  20. Abreu, Dilip & Matsushima, Hitoshi, 1992. "Virtual Implementation in Iteratively Undominated Strategies: Complete Information," Econometrica, Econometric Society, vol. 60(5), pages 993-1008, September.
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