Implementation with a bounded action space

Liad Blumrosen*, Michal Feldman

*Corresponding author for this work

Research output: Chapter in Book/Report/Conference proceedingConference contributionpeer-review

16 Scopus citations


While traditional mechanism design typically assumes isomorphism between the agents' type- and action spaces, in many situations the agents face strict restrictions on their action space due to, e.g., technical, behavioral or regulatory reasons. We devise a general framework for the study of mechanism design in single-parameter environments with restricted action spaces. Our contribution is threefold. First, we characterize sufficient conditions under which the information-theoretically optimal social-choice rule can be implemented in dominant strategies, and prove that any multilinear social-choice rule is dominant-strategy implementable with no additional cost. Second, we identify necessary conditions for the optimality of action-bounded mechanisms, and fully characterize the optimal mechanisms and strategies in games with two players and two alternatives. Finally, we prove that for any multilinear social-choice rule, the optimal mechanism with k actions incurs an expected loss of O(1/k2) compared to the optimal mechanisms with unrestricted action spaces. Our results apply to various economic and computational settings, and we demonstrate their applicability to signaling games, public-good models and routing in networks.

Original languageAmerican English
Title of host publicationProceedings of the 7th ACM Conference on Electronic Commerce 2006
PublisherAssociation for Computing Machinery (ACM)
Number of pages10
ISBN (Print)1595932364, 9781595932365
StatePublished - 2006
Event7th ACM Conference on Electronic Commerce - Ann Arbor, MI, United States
Duration: 11 Jun 200615 Jun 2006

Publication series

NameProceedings of the ACM Conference on Electronic Commerce


Conference7th ACM Conference on Electronic Commerce
Country/TerritoryUnited States
CityAnn Arbor, MI


  • Communication Complexity
  • Implementation
  • Mechansm Design
  • Single-Crossing Condition


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