Revelation principle

Principle in economics and game theory The revelation principle is a fundamental result in mechanism design, social choice theory, and game theory which shows it is always possible to design a strategy-resistant implementation of a social decision-making mechanism (such as an electoral system or market). It can be seen as a kind of mirror image to Gibbard's theorem. The revelation principle says that if a social choice function can be implemented with some non-honest mechanism—one where players have an incentive to lie—the same function can be implemented by an incentive-compatible (honesty-promoting) mechanism with the same equilibrium outcome (payoffs). The revelation principle shows that, while Gibbard's theorem proves it is impossible to design a system that will always be fully invulnerable to strategy (if we do not know how players will behave), it is possible to design a system that encourages honesty given a solution concept (if the corresponding equilibrium is unique). The idea behind the revelation principle is that, if we know which strategy the players in a game will use, we can simply ask all the players to submit their true payoffs or utility functions; then, we t