Robust virtual implementation: Toward a reinterpretation of the Wilson doctrine

Abstract

Abstract We study a mechanism design problem where arbitrary restrictions are placed on the sets of first-order beliefs of agents. Calling these restrictions Δ, we use Δ-rationalizability (Battigalli and Siniscalchi, 2003, [5] ) as our solution concept, and require that a mechanism virtually implement a socially desirable outcome. We obtain two necessary conditions, Δ-incentive compatibility and Δ-measurability and show that the latter is satisfied as long as a particular zero-measure set of first-order beliefs is ruled out. In environments allowing small transfers of utility among agents, these two conditions are also sufficient.