A Bayesian implementable social choice function cannot be implemented by a direct mechanism

Haoyang Wu ()

MPRA Paper from University Library of Munich, Germany

Abstract: The revelation principle is a fundamental theorem in many economics fields such as game theory, mechanism design and auction theory etc. In this paper, I construct an example to show that a social choice function which can be implemented in Bayesian Nash equilibrium by an indirect mechanism cannot be implemented by a direct mechanism. The key point is that agents pay cost in the indirect mechanism, but pay nothing in the direct mechanism. As a result, the revelation principle does not hold at all.

Keywords: Revelation principle; Game theory; Mechanism design; Auction theory (search for similar items in EconPapers)
JEL-codes: D70 D82 (search for similar items in EconPapers)
Date: 2016-09-11
New Economics Papers: this item is included in nep-gth, nep-hpe and nep-sog
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https://mpra.ub.uni-muenchen.de/73679/1/MPRA_paper_73679.pdf revised version (application/pdf)

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