Robust Implementation in Direct Mechanisms

TitleRobust Implementation in Direct Mechanisms
Publication TypeJournal Article
Year of Publication2009
AuthorsBergemann D, Morris S
JournalReview of Economic Studies
Pagination - 1204
Date PublishedOctober 2009
ISBN Number0034-6527, 0034-6527
KeywordsAsymmetric and Private Information, Mechanism Design (D82), Belief, Incentive Compatibility, Signals, Social Choice, Social Choice, Clubs, Committees, Associations (D71)
AbstractA 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.