The revelation principle fails when the format of each agent's strategy is an action

Haoyang Wu

MPRA Paper from University Library of Munich, Germany

Abstract: In mechanism design theory, a designer would like to implement a social choice function which specifies her favorite outcome for each possible profile of agents' private types. The revelation principle asserts that if a social choice function can be implemented by a mechanism in equilibrium, then there exists a direct mechanism that can truthfully implement it. This paper aims to propose a failure of the revelation principle. At first we point out that in any game the format of each agent's strategy is either an abstract message or a real action. For any given social choice function, if the mechanism which implements it in Bayesian Nash equilibrium has action-format strategies, then ``honest and obedient'' will not be an equilibrium strategy in the corresponding direct mechanism. Consequently, the revelation principle fails.

Keywords: Mechanism design; Revelation principle. (search for similar items in EconPapers)
JEL-codes: D71 (search for similar items in EconPapers)
Date: 2020-11-15
New Economics Papers: this item is included in nep-des, nep-gth and nep-mic
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https://mpra.ub.uni-muenchen.de/104171/1/MPRA_paper_104171.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/104237/1/MPRA_paper_104237.pdf revised version (application/pdf)
https://mpra.ub.uni-muenchen.de/104417/1/MPRA_paper_104417.pdf revised version (application/pdf)
https://mpra.ub.uni-muenchen.de/104554/1/MPRA_paper_104554.pdf revised version (application/pdf)

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