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Published June 1989 | Published
Journal Article Open

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

Palfrey, Thomas R. ORCID icon
Srivastava, Sanjay
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Abstract

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.

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.

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