Robust implementation in direct mechanisms

Dirk Bergemann, Stephen Morris

Research output: Contribution to journalArticle

40 Scopus citations

Abstract

A social choice function is robustly implementable if there is a mechanism under which the process of iteratively eliminating strictly dominated messages lead to outcomes that agree with the social choice function for all beliefs at every type profile. In an interdependent-value environment with single-crossing preferences, we identify a contraction property on the preferences which together with strict ex post incentive compatibility is sufficient to guarantee robust implementation in the direct mechanism. Strict ex post incentive compatibility and the contraction property are also necessary for robust implementation in any mechanism, including indirect ones. The contraction property requires that the interdependence is not too high. In a linear signal model, the contraction property is equivalent to an interdependence matrix having all eigenvalues smaller than one.

Original languageEnglish (US)
Pages (from-to)1175-1204
Number of pages30
JournalReview of Economic Studies
Volume76
Issue number4
DOIs
StatePublished - Sep 17 2009

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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