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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.
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