Strategyproofness for “Price Takers” as a Desideratum for Market Design

  • Eduardo Azevedo
  • Eric Budish
Conference paper
Part of the Lecture Notes of the Institute for Computer Sciences, Social Informatics and Telecommunications Engineering book series (LNICST, volume 80)


We distinguish between two ways a mechanism can fail to be strategyproof. A mechanism may have manipulations that persist with market size (first-order manipulations); and, a mechanism may have manipulations that vanish with market size (second-order manipulations). We say that a non-strategyproof mechanism is strategyproof in the large (SP-L) if all of its manipulations vanish with market size; that is, if it is strategyproof for “price takers”. We put “price takers” in quotes because our notion is not limited to mechanisms that explicitly use prices. Our main result is that, given a mechanism with Bayes-Nash or complete information Nash equilibria, there exists a prior free mechanism that is SP-L and that coincides exactly with the original mechanism in the limit. It coincides approximately in large finite markets, with exponential rate of convergence. Thus, while strategyproofness often severely limits what kinds of mechanisms are possible, for our class of problems SP-L does not, and hence may be a useful second-best. We illustrate our concepts with examples from single-unit assignment, multi-unit assignment, matching and auctions.


Information System Nash Equilibrium System Application Complete Information Market Size 
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Copyright information

© ICST Institute for Computer Science, Social Informatics and Telecommunications Engineering 2012

Authors and Affiliations

  • Eduardo Azevedo
  • Eric Budish

There are no affiliations available

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