Author(s)Izmalkov, Sergei; Lepinski, Matt; Micali, Silvio
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Privacy and trust a effect 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 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, a concrete extensive-form mechanism exactly preserving all strategic properties of M, without relying on a trusted mediator or violating the privacy of the players. We prove that any normal-form mechanism can be perfectly implemented by a verifiable mediator using envelopes and an envelope-randomizing device (i.e., the same tools used for running fair lotteries or tallying secret votes). Differently from a trusted mediator, a verifiable one only performs prescribed public actions, so that everyone can verify that he is acting properly, and that he never learns any information that should remain private.
DepartmentMassachusetts Institute of Technology. Department of Electrical Engineering and Computer Science
Games and Economic Behavior
Izmalkov, Sergei, Matt Lepinski, and Silvio Micali. "Perfect Implementation." Games and Economic Behavior, Elsevier, vol. 71(1), pages 121-140.
Author's final manuscript