Dominant-strategy incentive compatibility
Honesty is optimal for each participant no matter what anyone else reports, so no beliefs about the others are needed.
Often misread asAssuming the strongest standard is always available, so a mechanism gets dismissed for failing it when the task may be impossible in dominant strategies and perfectly solvable in expectation.
How to see it
Honest whatever anyone else says
The strongest form of honesty: telling the truth is your best move no matter what everyone else reports, even if they are all lying or confused. You never have to know how other people's information is distributed, or trust them to be rational.
The checkIt is a demanding standard, and the Gibbard result shows how little survives it in general settings. Bayesian incentive compatibility is the weaker and often the only feasible alternative.
Try itIn a second price auction, fix the other bids at anything at all, including nonsense, and check that your truthful bid still does at least as well as any other. The fact that you never had to look at the other bids is the property itself.
Know these first
Leads on to
Easily confused with
Sources
- Vickrey, W. (1961). Journal of Finance 16(1), 8-37.
- Gibbard, A. (1973). Econometrica 41(4), 587-601.
- Mas-Colell, A., Whinston, M. & Green, J. (1995). Oxford University Press.
- Krishna, V. (2002). Academic Press.