Implementation without Incentive Compatibility: Two Stories with Partially Informed Planners

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JournalGames and Economic Behaviour
DatePublished - 2015
Volume91
Number of pages10
Original languageEnglish

Abstract

We consider two stories, Typhoon by Conrad and Traveler’s Dilemma by Basu (1994, 2007), as implementation problems under incomplete information without incentive compatibility, but where the planner has some private information regarding the state. If social choice functions do not satisfy incentive compatibility, full implementation is unattainable via existing approaches. For each story, we construct a direct mechanism that relies on the planner’s private information. We provide a sufficient condition on players’ beliefs regarding the state under which every player has a unique rationalizable action, namely, telling the truth. Thus, in these stories, the planner’s information can bypass the lack of incentive compatibility.

    Research areas

  • Implementation, Rationalizability, Incentive compatibility, Incomplete information

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