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Unformatted text preview: Good news is that there is a very powerful result that allows us to restrict attention to a very particular game without lose of generality. We need couple of more deﬁnitions. Deﬁnition 7 A Direct Mechanism is a a game such that A n = Θ for all n . Deﬁnition 8 A truth-telling BNE of a direct mechanism (Θ ,g c ,g y ) is α * n ( θ n ) = θ n for all n such that θ n ∈ arg max ρ ∈ Θ X θ-n π ( θ-n ) ± u ( g c n ( ρ,θ-n ))-v ± g y n ( ρ,θ-n )) θ n ²² A feasible allocation is truthfully implementable if c n = g c n ( θ 1 ,...,θ N ) , y n = g y n ( θ 1 ,...,θ N ) In a direct mechanism, players are basically asked to report their skill type. We are interested in equilibria in which type is revealed truthfully. It turns out there is not loss of generality in doing that. 32...
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This note was uploaded on 12/10/2011 for the course MAT 121 taught by Professor Wong during the Fall '10 term at SUNY Stony Brook.
- Fall '10