Dominant Strategies Implementation when Compensations are Allowed:a Characterization Fundación

Abstract

Dominant strategies truthful implementation of flexible social objectives involves the ability of the planner to alter the individual incentives in such a way that the externality imposed on society by each agent reporting a given type is fully internalized in the agent’s final payoff. In other words, the agents’ objective function must mimic the social objectives. We find that our main result is robust enough to explain why well-known mechanisms like Groves’s transfers work in some contexts while some other social objectives are not implementable in dominant strategies.Individual decisiveness, compensation mechanisms, dominant strategies.