Download This PaperTruth-Telling Dominating Strategy: Impossibilities of Shill-Proofness
35 Pages Posted: 21 Apr 2020 Last revised: 6 Feb 2025
Date Written: February 12, 2020
Abstract
A strategy is truth-telling dominating (TTD) if it weakly (strictly, resp.) dominates truth-telling for all (some, resp.) strategy profiles of others. A strategy is iteratively TTD (i-TTD) if any iterate is TTD and payoff improving. We show that any mechanism only with undominated equilibria is not i-TTD manipulable. We also show that any TTD shill-bidding strategy is i-TTD. The Vickrey-Clarke-Groves (VCG) mechanism is not shill-proof, but neither the existence nor the nonexistence of TTD strategy had previously been known. We show both that VCG is TTD manipulable when externalities exist, but TTD non-manipulable in package auctions without externalities.
Keywords: obvious strategy-proofness, manipulability, VCG, shill bidding, package auction, externalities, referral, referrer's dilemma
JEL Classification: C78, D44, D62, D82
Suggested Citation: Suggested Citation