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Working paper 445
Alex Gershkov, Jacob Goeree, Alexey Kushnir, Benny Moldovanu, Xianwen Shi, "On the Equivalence of Bayesian and Dominant Strategy Implementation", 2012-02-16
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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 et al. (Annals of Probability, 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, Equivalence

JEL Classification: D82

Last updated on July 12, 2012