On the Equivalence of Bayesian and Dominant Strategy Implementation

22 Pages Posted: 21 Jul 2019

See all articles by Alex Gershkov

Alex Gershkov

Hebrew University of Jerusalem

J. K. Goeree

UNSW Business School

Alexey Kushnir

Carnegie Mellon University - David A. Tepper School of Business

Benny Moldovanu

University of Bonn - Chair of Economic Theory II; Centre for Economic Policy Research (CEPR)

Xianwen Shi

University of Toronto - Department of Economics

Date Written: July 19, 2019

Abstract

We consider a standard social choice environment with linear utilities and independent, one-dimensional, private types. We prove that for any Bayesian incentive compatible mechanism there exists an equivalent dominant strategy incentive compatible mechanism that delivers the same interim expected utilities for all agents and the same ex ante expected social surplus. The short proof is based on an extension of an elegant result due to Gutmann, Kemperman, Reeds, and Shepp (1991). We also show that the equivalence between Bayesian and dominant strategy implementation generally breaks down when the main assumptions underlying the social choice model are relaxed or when the equivalence concept is strengthened to apply to interim expected allocations.

Keywords: Bayesian implementation, dominant strategy implementation, mechanism design

JEL Classification: D82

Suggested Citation

Gershkov, Alex and Goeree, J. K. and Kushnir, Alexey I. and Moldovanu, Benny and Shi, Xianwen, On the Equivalence of Bayesian and Dominant Strategy Implementation (July 19, 2019). Econometrica, Vol. 81, No. 1, Forthcoming , Available at SSRN: https://ssrn.com/abstract=3422884

Alex Gershkov

Hebrew University of Jerusalem ( email )

Mount Scopus
Jerusalem, Jerusalem 91905
Israel

HOME PAGE: http://pluto.huji.ac.il/~alexg/

J. K. Goeree

UNSW Business School

UNSW Business School
High St
Sydney, NSW 2052
Australia

Alexey I. Kushnir (Contact Author)

Carnegie Mellon University - David A. Tepper School of Business ( email )

5000 Forbes Avenue
Pittsburgh, PA 15213-3890
United States

Benny Moldovanu

University of Bonn - Chair of Economic Theory II ( email )

Lennestrasse 37
53113 Bonn
Germany
+49 228 736395 (Phone)
+49 228 737940 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Xianwen Shi

University of Toronto - Department of Economics ( email )

150 St. George Street
Toronto, Ontario M5S3G7
Canada

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