Perfect Implementation

Sergei Izmalkov (), Matt Lepinski and Silvio Micali
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Sergei Izmalkov: New Economic School

No w0140, Working Papers from New Economic School (NES)

Abstract: Privacy and trust a ect our strategic thinking, yet they have not been precisely modeled in mechanism design. In settings of incomplete information, traditional implementations of a normal-form mechanism - by disregarding the players' privacy, or assuming trust in a mediator - may fail to reach the mechanism's objectives. We thus investigate implementations of a new type. We put forward the notion of a perfect implementation of a normal-form mechanism M: in essence, a concrete extensive-form mechanism exactly preserving all strategic properties of M, without relying on a trusted mediator or violating the privacy of the players. We prove that any normal-form mechanism can be perfectly implemented by a verifiable mediator using envelopes and an envelope-randomizing device (i.e., the same tools used for running fair lotteries or tallying secret votes). Differently from a trusted mediator, a veri able one only performs prescribed public actions, so that everyone can verify that he is acting properly, and that he never learns any information that should remain private

Pages: 26 pages
Date: 2010-01
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Citations: View citations in EconPapers (2)

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