Technical Report Treading a Fine Line : (Im)possibilities for Nash Implementation with Partially-honest Individuals

Lombardi, Michele  ,  Yoshihara, Naoki

2016-08 , Institute of Economic Research, Hitotsubashi University
This paper investigates the robustness of Dutta and Sen's (2012) Theorem 1 to re-ductions in the strategy space of individuals in relation to preference announcements. Specifically, it considers the Saijo-type's (1988) simplification of Maskin's canonical mechanism, according to which each individual's strategy choice includes her own preference and those of her k ‘neighbor’ individuals. This paper refers to this type of mechanisms as q-mechanisms where q = k + 1. A partially-honest individual is an individual who strictly prefers to tell the truth whenever lying has no effect on her material well-being. When there is at least one partially-honest participant, it offers a necessary condition for Nash implementation by q-mechanisms, called partial-honesty monotonicity, and shows that in an independent domain of preferences that condition is equivalent to Maskin monotonicity. It also shows that the limitations imposed by Maskin monotonicity can be circumvented by a q-mechanism provided that there are at least n - q + 1 partially-honest participants.

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