Secure implementation experiments: Do strategy-proof mechanisms really work?

Timothy N. Cason, Tatsuyoshi Saijo, Tomas Sjöström, Takehiko Yamato

Research output: Contribution to journalArticle

31 Scopus citations

Abstract

Strategy-proofness, requiring that truth-telling is a dominant strategy, is a standard concept used in social choice theory. Saijo, Sjöström and Yamato [Saijo, T., Sjöström, T., Yamato, T., 2003. Secure implementation: Strategy-proof mechanisms reconsidered. Working paper 4-03-1. Department of Economics, Pennsylvania State University] argue that this concept has serious drawbacks. In particular, many strategy-proof mechanisms have a continuum of Nash equilibria, including equilibria other than dominant strategy equilibria. For only a subset of strategy-proof mechanisms do the set of Nash equilibria and the set of dominant strategy equilibria coincide. For example, this double coincidence occurs in the Groves mechanism when preferences are single-peaked. We report experiments using two strategy-proof mechanisms. One of them has a large number of Nash equilibria, but the other has a unique Nash equilibrium. We found clear differences in the rate of dominant strategy play between the two.

Original languageEnglish (US)
Pages (from-to)206-235
Number of pages30
JournalGames and Economic Behavior
Volume57
Issue number2
DOIs
Publication statusPublished - Nov 1 2006

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All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics

Keywords

  • Experiment
  • Groves-Clarke
  • Laboratory
  • Learning
  • Pivotal
  • Secure implementation

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