Strategy-proofness in the Large

Eduardo M. Azevedo, Eric Budish

NBER Working Paper No. 23771
Issued in September 2017
NBER Program(s):Industrial Organization

We propose a criterion of approximate incentive compatibility, strategy-proofness in the large (SP-L), and argue that it is a useful second-best to exact strategy-proofness (SP) for market design. Conceptually, SP-L requires that an agent who regards a mechanism’s “prices” as exogenous to her report – be they traditional prices as in an auction mechanism, or price-like statistics in an assignment or matching mechanism – has a dominant strategy to report truthfully. Mathematically, SP-L weakens SP in two ways: (i) truth-telling is required to be approximately optimal (within epsilon in a large enough market) rather than exactly optimal, and (ii) incentive compatibility is evaluated ex interim, with respect to all full-support i.i.d. probability distributions of play, rather than ex post with respect to all possible realizations of play. This places SP-L in between the traditional notion of approximate strategy-proofness, which evaluates incentives to manipulate ex post, and the traditional notion of approximate Bayes-Nash incentive compatibility, which evaluates incentives to manipulate ex interim with respect to the single common-knowledge probability distribution associated with Bayes-Nash equilibrium.

You may purchase this paper on-line in .pdf format from ($5) for electronic delivery.

Access to NBER Papers

You are eligible for a free download if you are a subscriber, a corporate associate of the NBER, a journalist, an employee of the U.S. federal government with a ".GOV" domain name, or a resident of nearly any developing country or transition economy.

If you usually get free papers at work/university but do not at home, you can either connect to your work VPN or proxy (if any) or elect to have a link to the paper emailed to your work email address below. The email address must be connected to a subscribing college, university, or other subscribing institution. Gmail and other free email addresses will not have access.


Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w23771

Users who downloaded this paper also downloaded* these:
Rees-Jones and Taubinsky w23980 Taxing Humans: Pitfalls of the Mechanism Design Approach and Potential Resolutions
Bhave and Budish w23770 Primary-Market Auctions for Event Tickets: Eliminating the Rents of 'Bob the Broker'?
Raskin and Yermack w22238 Digital Currencies, Decentralized Ledgers, and the Future of Central Banking
Nevo and Wong w21318 The Elasticity of Substitution Between Time and Market Goods: Evidence from the Great Recession
Abdulkadiroglu, Pathak, and Roth w14864 Strategy-proofness versus Efficiency in Matching with Indifferences: Redesigning the New York City High School Match
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us