On the Equivalence of Bayesian and Dominant Strategy Implementation
22 Pages Posted: 21 Jul 2019
Date Written: July 19, 2019
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
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