This research is supported by NSF Grant SES-0095321. We would like to thank the co-editor, three anonymous referees, and seminar participants at many institutions for helpful comments. We thank Bob Evans for pointing out errors in earlier examples and Sandeep Baliga, Matt Jackson, Jon Levin, Bart Lipman, Eric Maskin, Zvika Neeman, Andrew Postlewaite, Ilya Segal, and Tomas Sjöström for valuable discussions.
Robust Mechanism Design
Article first published online: 11 OCT 2005
Volume 73, Issue 6, pages 1771–1813, November 2005
How to Cite
Bergemann, D. and Morris, S. (2005), Robust Mechanism Design. Econometrica, 73: 1771–1813. doi: 10.1111/j.1468-0262.2005.00638.x
- Issue published online: 11 OCT 2005
- Article first published online: 11 OCT 2005
- Manuscript received May, 2003; final revision received May, 2005.
- Mechanism design;
- common knowledge;
- universal type space;
- interim equilibrium;
- ex post equilibrium;
- dominant strategies
The mechanism design literature assumes too much common knowledge of the environment among the players and planner. We relax this assumption by studying mechanism design on richer type spaces.
We ask when ex post implementation is equivalent to interim (or Bayesian) implementation for all possible type spaces. The equivalence holds in the case of separable environments; examples of separable environments arise (1) when the planner is implementing a social choice function (not correspondence) and (2) in a quasilinear environment with no restrictions on transfers. The equivalence fails in general, including in some quasilinear environments with budget balance.
In private value environments, ex post implementation is equivalent to dominant strategies implementation. The private value versions of our results offer new insights into the relationship between dominant strategy implementation and Bayesian implementation.