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Mechanism Design with Incomplete Information: A Solution to the Implementation Problem

Palfrey, Thomas R. and Srivastava, Sanjay (1989) Mechanism Design with Incomplete Information: A Solution to the Implementation Problem. Journal of Political Economy, 97 (31). pp. 668-691. ISSN 0022-3808. doi:10.1086/261621.

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The main result of this paper is that the multiple equilibrium problem in mechanism design can be avoided in private-value models if agents do not use weakly dominated strategies in equilibrium. We show that in such settings, any incentive-compatible allocation rule can be made the unique equilibrium outcome to a mechanism. We derive a general necessary condition for unique implementation that implies that the positive result for private-value models applies. with considerably less generality to the common-value settings.

Item Type:Article
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Palfrey, Thomas R.0000-0003-0769-8109
Additional Information:© 1989 University of Chicago Press. We thank the National Science Foundation for financial support under grant SES-8608118 and are grateful to seminar participants at Carnegie-Mellon University, Stanford University, the University of Chicago, and California Institute of Technology for comments. Palfrey gratefully acknowledges the financial support of the Sloan Foundation and the Exxon Education Foundation to the Center for Advanced Study in the Behavioral Sciences. We also wish to thank the referees and Robert Townsend for useful suggestions.
Funding AgencyGrant Number
Alfred P. Sloan FoundationUNSPECIFIED
Exxon Education FoundationUNSPECIFIED
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Other Numbering System NameOther Numbering System ID
Social Science Working Paper658
Series Name:Social Science Working Paper
Issue or Number:31
Record Number:CaltechAUTHORS:20160307-152427094
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Official Citation:Mechanism Design with Incomplete Information: A Solution to the Implementation Problem Thomas R. Palfrey and Sanjay Srivastava Journal of Political Economy 1989 97:3, 668-691
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:65154
Deposited On:18 Mar 2016 23:48
Last Modified:10 Nov 2021 23:40

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