An Experiment on Nash Implementation

Abstract

We perform an experimental test of a modification of the controversial canonical mechanism for Nash implementation, using three subjects in non-repeated groups, as well as three outcomes, states of nature, and integer choices. We find that this mechanism successfully implements the desired outcome a large majority of the time, providing empirical evidence for the feasibility of such implementation. In addition, the performance is further improved by imposing a fine on a dissident, so that the mechanism implements strict Nash equilibria. While our environment is stylized, our results offer hope that experiments can identify reasonable features for practical implementation mechanisms.