Rationalizable Incentives: Interim Implementation of Sets in Rationalizable Strategies

Bravo Working Paper # 2020-015

54 Pages Posted: 16 Mar 2020

See all articles by Takashi Kunimoto

Takashi Kunimoto

Brown University - Department of Economics

Roberto Serrano

Brown University

Date Written: January 1, 2020

Abstract

This paper investigates rationalizable implementation of social choice sets (SCSs) in incomplete information environments. We identify rationalizable incentive compatibility (RIC) as its key condition, argue by means of example that RIC is strictly weaker than the standard Bayesian incentive compatibility (BIC), and show that RIC reduces to BIC when we only consider single-valued SCSs (i.e., social choice functions or SCFs). We next identify additional necessary conditions and, essentially closing the gap between necessity and sufficiency, obtain a sufficiency result for rationalizable implementation in general environments. We also characterize a well-studied class of economic environments in which RIC is essentially the only condition needed for rationalizable implementation. Considering SCFs, we show that interim rationalizable monotonicity, found in the literature, is not necessary for rationalizable implementation, as had been previously claimed.

Keywords: rationalizable incentive compatibility, Bayesian incentive compatibility, uniform Bayesian monotonicity, interim rationalizable monotonicity, implementation, rationalizability

JEL Classification: C72, D78, D82

Suggested Citation

Kunimoto, Takashi and Serrano, Roberto, Rationalizable Incentives: Interim Implementation of Sets in Rationalizable Strategies (January 1, 2020). Bravo Working Paper # 2020-015 , Available at SSRN: https://ssrn.com/abstract=3540535 or http://dx.doi.org/10.2139/ssrn.3540535

Takashi Kunimoto

Brown University - Department of Economics ( email )

64 Waterman Street
Providence, RI 02912
United States
401-863-2735 (Phone)
401-863-1970 (Fax)

Roberto Serrano (Contact Author)

Brown University ( email )

64 Waterman Street
Providence, RI 02912
United States
401-863-1036 (Phone)
401-863-1970 (Fax)

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