Journal Article

Robust Implementation in Direct Mechanisms

Dirk Bergemann and Stephen Morris

in The Review of Economic Studies

Published on behalf of Review of Economic Studies Ltd

Volume 76, issue 4, pages 1175-1204
Published in print October 2009 | ISSN: 0034-6527
Published online October 2009 | e-ISSN: 1467-937X | DOI: http://dx.doi.org/10.1111/j.1467-937X.2009.00553.x
Robust Implementation in Direct Mechanisms

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  • Information, Knowledge, and Uncertainy
  • Analysis of Collective Decision-making

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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.

Keywords: D71; D82

Journal Article.  11158 words.  Illustrated.

Subjects: Information, Knowledge, and Uncertainy ; Analysis of Collective Decision-making

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