Ealier Version in 46th Foundation of Computer Science Conference
Series/Report no.
Massachusetts Institute of Technology Computer Science and Artificial Intelligence Laboratory
Abstract
Privacy and trust affect our strategic thinking, yet they have not been precisely modeled in mechanism design. In settings of incomplete information, traditional implementations of a normal-form mechanism ---by disregarding the players' privacy, or assuming trust in a mediator--- may not be realistic and fail to reach the mechanism's objectives. We thus investigate implementations of a new type.We put forward the notion of a perfect implementation of a normal-form mechanism M: in essence, an extensive-form mechanism exactly preserving all strategic properties of M, without relying on a trusted party or violating the privacy of the players.We prove that ANY normal-form mechanism can be perfectly implemented via envelopes and an envelope-randomizing device (i.e., the same tools used for running fair lotteries or tallying secret votes).
