Econometrica: May, 2006, Volume 74, Issue 3

The Limits of ex post Implementation

https://doi.org/10.1111/j.1468-0262.2006.00675.x
p. 585-610

Philippe Jehiel, Moritz Meyer‐ter‐Vehn, Benny Moldovanu, William R. Zame

The sensitivity of Bayesian implementation to agents' beliefs about others suggests the use of more robust notions of implementation such as ex post implementation, which requires that each agent's strategy be optimal for every possible realization of the types of other agents. We show that the only deterministic social choice functions that are ex post implementable in generic mechanism design frameworks with multidimensional signals, interdependent valuations, and transferable utilities are constant functions. In other words, deterministic ex post implementation requires that the same alternative must be chosen irrespective of agents' signals. The proof shows that ex post implementability of a nontrivial deterministic social choice function implies that certain rates of information substitution coincide for all agents. This condition amounts to a system of differential equations that are not satisfied by generic valuation functions.