Revelation principle

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The revelation principle of economics can be stated as, "To any equilibrium of a game of incomplete information, there corresponds an associated revelation mechanism that has an equilibrium where the players truthfully report their types."

The revelation principle is useful in game theory, social welfare and auctions. William Vickrey, winner of the 1996 Nobel Prize for Economics, devised an auction type where the highest bidder would win the sealed bid auction, but at the price offered by the second-highest bidder. Under this system, the highest bidder would be better motivated to reveal his maximum price than in traditional auctions, which would also benefit the seller.

[edit] See also

• Mechanism design
• Market for lemons
• Nash equilibrium
• Game theory
• Constrained pareto efficiency

v·d·e Topics in game theory
Definitions	Normal-form game · Extensive-form game · Cooperative game · Information set · Preference
Equilibrium concepts	Nash equilibrium · Subgame perfection · Bayesian-Nash · Perfect Bayesian · Trembling hand · Proper equilibrium · Epsilon-equilibrium · Correlated equilibrium · Sequential equilibrium · Quasi-perfect equilibrium · Evolutionarily stable strategy · Risk dominance · Pareto efficiency
Strategies	Dominant strategies · Pure strategy · Mixed strategy · Tit for tat · Grim trigger · Collusion · Backward induction
Classes of games	Symmetric game · Perfect information · Dynamic game · Sequential game · Repeated game · Signaling game · Cheap talk · Zero-sum game · Mechanism design · Bargaining problem · Stochastic game · Nontransitive game · Global games
Games	Prisoner's dilemma · Traveler's dilemma · Coordination game · Chicken · Volunteer's dilemma · Dollar auction · Battle of the sexes · Stag hunt · Matching pennies · Ultimatum game · Minority game · Rock-paper-scissors · Pirate game · Dictator game · Public goods game · Blotto games  ·War of attrition  ·El Farol Bar problem  ·Cake cutting  ·Cournot game  ·Deadlock  ·Diner's dilemma  ·Guess 2/3 of the average  ·Kuhn poker  ·Nash bargaining game  ·Screening game  ·Signaling game  ·Trust game  ·Princess and monster game
Theorems	Minimax theorem · Purification theorem · Folk theorem · Revelation principle · Arrow's impossibility theorem

This page uses content from the English-language version of Wikipedia. The original article was at Revelation principle. The list of authors can be seen in the page history. As with Psychology Wiki, the text of Wikipedia is available under the GNU Free Documentation License.