Mechanism Design with Sequential-Move Games: Revelation Principle

Abstract

Traditionally, mechanism design focuses on simultaneous-move games (e.g., Myerson (1981)). In this paper, we study mechanism design with sequential-move games, and provide two results on revelation principles for general solution concepts (e.g., perfect Bayesian equilibrium, obvious dominance, strong-obvious dominance). First, if a solution concept is additive, implementation in sequential-move games is equivalent to implementation in simultaneous-move games. Second, for any solution concept \r{ho} and any social choice function f, we identify a canonical operator {\gamma}^{(\r{ho},f)}, which is defined on primitives. We prove that, if \r{ho} is monotonic, f can be implemented by a sequential-move game if and only if {\gamma}^{(\r{ho},f)} is achievable, which translates a complicated mechanism design problem into checking some conditions defined on primitives. Most of the existing solution concepts are either additive or monotonic.