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T-Space at The University of Toronto Libraries >
Theoretical Economics >
Volume 4, Number 1 (March 2009) >

Please use this identifier to cite or link to this item: http://hdl.handle.net/1807/17331

Title: Robust virtual implementation
Authors: Dirk Bergemann; Department of Economics, Yale University
Stephen Morris; Department of Economics, Princeton University
Keywords: Mechanism design, virtual implementation, robust implementation, rationalizability, ex-post incentive compatibility
C79, D82
Issue Date: 1-Mar-2009
Publisher: Theoretical Economics
Citation: Theoretical Economics; Vol 4, No 1 (2009)
Abstract: [This item is a preserved copy. To view the original, visit http://econtheory.org/] In a general interdependent preference environment, we characterize when two payoff types can be distinguished by their rationalizable strategic choices without any prior knowledge of their beliefs and higher order beliefs. We show that two payoff types are strategically distinguishable if and only if they satisfy a separability condition. The separability condition for each agent essentially requires that there is not too much interdependence in preferences across agents. A social choice function, mapping payoff type profiles to outcomes, can be robustly virtually implemented if there exists a mechanism such that every equilibrium on every type space achieves an outcome that is arbitrarily close to the outcome generated by the social choice function. This definition is equivalent to requiring virtual implementation in iterated deletion of strategies that are strictly dominated for all beliefs. The social choice function is robustly measurable if strategically indistinguishable payoff types receive the same allocation. We show that ex post incentive compatibility and robust measurability are necessary and sufficient for robust virtual implementation.
URI: http://hdl.handle.net/1807/17331
Other Identifiers: http://econtheory.org/ojs/index.php/te/article/view/20090045
Rights: Authors who publish in <i>Theoretical Economics</i> will release their articles under the <a href="http://creativecommons.org/licenses/by-nc/2.5/">Creative Commons Attribution-NonCommercial license</a>. This license allows anyone to copy and distribute the article for non-commercial purposes provided that appropriate attribution is given.
Appears in Collections:Volume 4, Number 1 (March 2009)

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