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Mechanism Design and Communication Networks

By Ludovic Renou and Tristan Tomala


Theoretical Economics is an open access journal. All articles from this journal are freely available from the journal's website.This paper studies a mechanism design model where the players and the\ud designer are nodes in a communication network. We characterize the communication\ud networks (directed graphs) for which, in any environment (utilities\ud and beliefs), every incentive compatible social choice function is partially implementable.\ud We show that any incentive compatible social choice function is\ud implementable on a given communication network, in all environments with either\ud common independent beliefs and private values or a worst outcome, if and\ud only if the network is strongly connected and weakly 2-connected. A network\ud is strongly connected if for each player, there exists a directed path to the designer.\ud It is weakly 2-connected if each player is either directly connected to the\ud designer or indirectly connected to the designer through two disjoint paths, not\ud necessarily directed. We couple encryption techniques together with appropriate\ud incentives to secure the transmission of each player’s private information to the\ud designer.Peer-reviewedPost-prin

Topics: Mechanism design, incentives, Bayesian equilibrium, communication networks, encryption, secure transmission
Publisher: Econometric Society
Year: 2011
OAI identifier: oai:lra.le.ac.uk:2381/9729

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