Theoretical model demonstrates truth implementation in nonstrategic environments, revealing that a one-way cheating rule reliably identifies liars during disputes.
A principal decides which party deserves a prize. Only the parties observe the state that determines who is deserving. The principal gives each party a text describing the conditions under which that party deserves the prize and asks each to report the state. The parties are nonstrategic. Each activates a known cheating procedure whose outcome depends on the state and on the text. Implementation is achieved if, whenever the parties disagree, the liar is identified by the “one-way cheating principle”: The truthful party is the unique party who could not have produced his story had the rival's story been true. (JEL D82, D91)
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Glazer et al. (2026) studied this question.
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