On the equivalence between Bayesian and dominant strategy implementation: the case of correlated types

Kushnir, Alexey (2013). On the equivalence between Bayesian and dominant strategy implementation: the case of correlated types. Working paper series / Department of Economics 129, University of Zurich.

Abstract

We consider general social choice environments with private values and correlated types. Each agent's matrix of conditional probabilities satisfies the full rank condition. We show that for any Bayesian incentive compatible mechanism there exists a dominant strategy incentive compatible mechanism that delivers the same interim expected utilities to all agents and generates at least the same social surplus. In addition, if there is a social alternative that is inferior to the other alternatives for all agents the dominant strategy incentive compatible mechanism matches exactly the social surplus. These results extend to environments with interdependent values satisfying the single crossing condition.

Abstract

We consider general social choice environments with private values and correlated types. Each agent's matrix of conditional probabilities satisfies the full rank condition. We show that for any Bayesian incentive compatible mechanism there exists a dominant strategy incentive compatible mechanism that delivers the same interim expected utilities to all agents and generates at least the same social surplus. In addition, if there is a social alternative that is inferior to the other alternatives for all agents the dominant strategy incentive compatible mechanism matches exactly the social surplus. These results extend to environments with interdependent values satisfying the single crossing condition.

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Item Type: Working Paper 03 Faculty of Economics > Department of Economics Working Paper Series > Department of Economics 330 Economics D82 Mechanism design, Bayesian implementation, dominant strategy implementation, full surplus extraction, correlation English August 2013 14 Aug 2013 13:37 05 Apr 2016 16:54 Working paper series / Department of Economics 9 1664-7041 http://www.econ.uzh.ch/static/wp/econwp129.pdf http://www.econ.uzh.ch/static/workingpapers.php