 Dominance of truthtelling and the lattice structure of Nash equilibriaOlivier Bochet () and Norovsambuu Tumennasan () Journal of Economic Theory, 2020, vol. 185, issue C Abstract: Truthtelling is often viewed as focal in the direct mechanisms associated with strategy-proof decision rules. Yet many direct mechanisms also admit Nash equilibria whose outcomes differ from the one under truthtelling. We study a model that has been widely discussed in the mechanism design literature (Sprumont, 1991) and whose strategy-proof and efficient rules typically suffer from the aforementioned deficit. We show that when a rule in this class satisfies the mild additional requirement of replacement monotonicity, the set of Nash equilibrium allocations of its preference revelation game is a complete lattice with respect to the order of Pareto dominance. Furthermore, the supremum of the lattice is the one obtained under truthtelling. In other words, truthtelling Pareto dominates all other Nash equilibria. For the rich subclass of weighted uniform rules, the Nash equilibrium allocations are, in addition, strictly Pareto ranked. We discuss the tightness of the result and some possible extensions. Keywords: Sequential allotment rules; Strategy-proofness; Truthtelling; Lattice; Pareto dominance (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:185:y:2020:i:c:s0022053118304319 DOI: 10.1016/j.jet.2019.104952 Access Statistics for this article Journal of Economic Theory is currently edited by A. Lizzeri and K. Shell More articles in Journal of Economic Theory from Elsevier |
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