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A Revelation Principle for Dominant Strategy Implementation

Author

Listed:
  • Jesse A. Schwartz

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

  • Quan Wen

    (Department of Economics, Vanderbilt University)

Abstract

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
    as

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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Dominant strategy implementation; Vickrey-Clarke-Groves mechanisms; public good provision; bilateral bargaining;
    All these keywords.

    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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