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Abstract

Vol. 58, No. 2, pp. 122-135 (2007)

“Secure Implementation -Theory and Experiments-”
Tatsuyoshi Saijo (Institute of Social and Economic Research, Osaka University and Research Institute of Market Structure), Takehiko Yamato (Department of Value and Decision Science, Graduate School of Decision Science and Technology, Tokyo Institute of Technology)

Strategy-proofness, requiring that truth-telling is a dominant strategy, is a standard concept used in social choice theory. However, we argue that this concept has serious drawbacks. In particular, many strategy-proof mechanisms have a continuum of Nash equilibria, some of which produce the wrong outcome. A possible solution to this problem is to require double implementation in dominant strategy equilibria and in Nash equilibria, called secure implementation. We conducted experiments on two strategy-proof mechanisms. One of them is not secure with many bad Nash equilibria, whereas the other secure mechanism has a unique good Nash equilibrium. We observed subjects adopted dominant strategies significantly less often in the non-secure mechanism than in the secure mechanism.