Mechanism Design and Communication Networks

This paper characterizes the class of communication networks for which, in any environment (utilities and beliefs), every incentive-compatible social choice function is (partially) implementable. Among others, in environments with either common and independent beliefs and private values or a bad outcome, we show that if the communication network is 2-connected, then any incentive-compatible social choice function is implementable. A network is 2-connected if each player is either directly connected to the designer or indirectly connected to the designer through at least two disjoint paths. We couple encryption techniques together with appropriate incentives to secure the transmission of each player’s private information to the designer.