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Robust Mechanism Design

Stephen Morris and Dirk Bergemann

Yale School of Management Working Papers from Yale School of Management

Abstract: The mechanism design literature assumes too much common knowledge of the environment among the players and planner. We relax this assumption by studying implementation on richer type spaces, with more higher order uncertainty. We study the "ex post equivalence" question: When is interim implementation on all possible type spaces equivalent to requiring ex post implementation on the space of payoff types? We show that ex post equivalence holds when the social choice correspondence is a function and in simple quasi-linear environments. When ex post equivalence holds, we identify how large the type space must be to obtain the equivalence. We also show that ex post equivalence fails in general, including in quasi-linear environments with budget balance. For quasi-linear environments, we provide an exact characterization of when interim implementation is possible in rich type spaces. In this environment, the planner can fully extract players' belief types, so the incentive constraints reduce to conditions distinguishing types with the same beliefs about others' types but different payoff types.

Keywords: Mechanism Design; Common Knowledge; Universal Type Space; Interim Equilibrium; Ex-post Equilibrium; Dominant Strategies (search for similar items in EconPapers)
JEL-codes: C79 C82 (search for similar items in EconPapers)
Date: 2004-07-28
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Citations: View citations in EconPapers (23)

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Related works:
Chapter: Robust Mechanism Design (2012) Downloads
Journal Article: Robust Mechanism Design (2005) Downloads
Working Paper: Robust Mechanism Design (2005) Downloads
Working Paper: Robust Mechanism Design (2004) Downloads
Working Paper: Robust Mechanism Design (2003) Downloads
Working Paper: Robust Mechanism Design (2003) Downloads
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