Implementation by mediated equilibrium

Implementation theory tackles the following problem given a social choice correspondence (SCC), find a decentralized mechanism such that for every constellation of the individuals’ preferences, the set of outcomes in equilibrium is exactly the set of socially optimal alternatives (as specified by the correspondence). In this paper we are concerned with implementation by mediated equilibrium; under such an equilibrium, the players’ strategies can be coordinated in a way that discourages deviation. Our main result is a complete characterization of SCCs that are implementable by mediated strong equilibrium. This characterization, in addition to being strikingly concise, implies that some important SCCs that are not implementable by strong equilibrium are in fact implementable by mediated strong equilibrium.

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