Beyond Hurwicz: Incentive Compatibility under Informational Decentralization

TL;DR

This paper explores incentive compatibility in decentralized information settings, showing traditional mechanisms are impossible but proposing a new class of indirect, parallel game mechanisms that can enforce incentives.

Contribution

It introduces a novel class of non-revelation-equivalent mechanisms that maintain incentive compatibility through indirect preference inference in decentralized environments.

Findings

Revelation-based mechanisms are generally impossible under decentralization.

A new class of mechanisms using parallel, uncorrelatable games can sustain enforcement.

These mechanisms enable incentive compatibility beyond traditional approaches.

Abstract

Achieving incentive compatibility under informational decentralization is impossible within the class of direct and revelation-equivalent mechanisms typically studied in economics and computer science. We show that these impossibility results are conditional by identifying a narrow class of non-revelation-equivalent mechanisms that sustain enforcement by inferring preferences indirectly through parallel, uncorrelatable games.