Secure Implementation Experiments: Do Strategy-proof Mechanisms Really Work?

Author Name SAIJO Tatsuyoshi  (Faculty Fellow) /Timothy N. CASON/Tomas SJOSTROM
Creation Date/NO. May 2003 03-E-012
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Strategy-proofness, requiring that truth-telling is a dominant strategy, is a standard concept used in social choice theory. Saijo et al. (2003) argue that this concept has serious drawbacks. In particular, announcing one's true preference may not be a unique dominant strategy, and almost all strategy-proof mechanisms have a continuum of Nash 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 where 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. Journal of Economic Literature Classification

Number: C92, D71, D78, and H41.