"Implementation, Verification, and Detection"

Matsushima, Hitoshi

September 2015

We investigate implementation of social choice functions, where we make severe restrictions on mechanisms such as detail-freeness, boundedness, only tiny transfers permitted, and uniqueness of iteratively undominated strategy profile in the ex-post term. After the determination of allocation, some partial information about the state becomes verifiable. The central planner can make the transfers contingent on this information. By demonstrating a sufficient condition for implementation, namely full detection, we show that a wide variety of social choice functions are uniquely implementable even if the range of players’ lies that the verified information can directly detect is quite narrow. With full detection, we can detect all possible lies, not by the verified information alone, but by processing a chain of detection triggered by this information. The designed mechanism is sequential in that each player makes announcements twice at two distinct stages. This paper does not assume expected utility, quasi-linearity, and risk neutrality.