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A Revelation Principle for Dominant Strategy Implementation


  • Jesse A. Schwartz

    () (Department of Economics, Finance and Quantitative Analysis, Kennesaw State University)

  • Quan Wen

    () (Department of Economics, Vanderbilt University)


We introduce a perfect price discriminating (PPD) mechanism for allocation problems with private information. A PPD mechanism treats a seller, for example, as a perfect price discriminating monopolist who faces a price schedule that does not depend on her report. In any PPD mechanism, every player has a dominant strategy to truthfully report her private information. We establish a revelation principle for dominant strategy implementation: any outcome that can be dominant strategy implemented can also be dominant strategy implemented using a PPD mechanism. We apply this principle to derive the optimal, budget-balanced, dominant strategy mechanisms for public good provision and bilateral bargaining.

Suggested Citation

  • Jesse A. Schwartz & Quan Wen, 2008. "A Revelation Principle for Dominant Strategy Implementation," Vanderbilt University Department of Economics Working Papers 0819, Vanderbilt University Department of Economics.
  • Handle: RePEc:van:wpaper:0819

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    References listed on IDEAS

    1. Roger B. Myerson, 2008. "Perspectives on Mechanism Design in Economic Theory," American Economic Review, American Economic Association, vol. 98(3), pages 586-603, June.
    2. Green, Jerry & Laffont, Jean-Jacques, 1977. "Characterization of Satisfactory Mechanisms for the Revelation of Preferences for Public Goods," Econometrica, Econometric Society, vol. 45(2), pages 427-438, March.
    3. Krishna, Vijay, 2009. "Auction Theory," Elsevier Monographs, Elsevier, edition 2, number 9780123745071.
    4. Myerson, Roger B. & Satterthwaite, Mark A., 1983. "Efficient mechanisms for bilateral trading," Journal of Economic Theory, Elsevier, vol. 29(2), pages 265-281, April.
    5. Mookherjee, Dilip & Reichelstein, Stefan, 1992. "Dominant strategy implementation of Bayesian incentive compatible allocation rules," Journal of Economic Theory, Elsevier, vol. 56(2), pages 378-399, April.
    6. Paul Milgrom & Ilya Segal, 2002. "Envelope Theorems for Arbitrary Choice Sets," Econometrica, Econometric Society, vol. 70(2), pages 583-601, March.
    7. Milgrom,Paul, 2004. "Putting Auction Theory to Work," Cambridge Books, Cambridge University Press, number 9780521536721, March.
    8. Lawrence Ausubel & Peter Cramton, 2004. "Vickrey auctions with reserve pricing," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 23(3), pages 493-505, March.
    9. McAfee, R. Preston, 1992. "A dominant strategy double auction," Journal of Economic Theory, Elsevier, vol. 56(2), pages 434-450, April.
    10. William Vickrey, 1961. "Counterspeculation, Auctions, And Competitive Sealed Tenders," Journal of Finance, American Finance Association, vol. 16(1), pages 8-37, March.
    Full references (including those not matched with items on IDEAS)

    More about this item


    Dominant strategy implementation; Vickrey-Clarke-Groves mechanisms; public good provision; bilateral bargaining;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods


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