Advertisement

Evidence reading mechanisms

  • Frédéric KoesslerEmail author
  • Eduardo Perez-Richet
Original Paper
  • 13 Downloads

Abstract

In an environment with privately informed agents who can produce evidence, we study implementation of a social choice function by reading mechanisms: mechanisms that simply apply the social choice function to a consistent interpretation of the evidence. We provide sufficient conditions on the social choice function and the evidence structure for ex post implementability by such mechanisms. If the first-best policy of a mechanism designer satisfies this condition, then its implementation by a reading mechanism does not require commitment. We show that with rich evidence structures, (1) a function that is implementable with transfers is also implementable with evidence but no transfer, (2) under private value, the efficient allocation is implementable with budget balanced and individually rational transfers, and (3) in single-object auction and bilateral trade environments with interdependent values, the efficient allocation is implementable with budget balanced and individually rational transfers.

Notes

Acknowledgements

Frederic Koessler acknowledges the support of the Agence Nationale de la Recherche under the framework of the Investissements d’avenir programme reference ANR-17-EURE-001.

References

  1. Ben-Porath E, Lipman BL (2012) Implementation with partial provability. J Econ Theory 147(5):1689–1724CrossRefGoogle Scholar
  2. Ben-Porath E, Dekel E, Lipman BL (2014) Optimal allocation with costly verification. Am Econ Rev 104(12):3779–3813CrossRefGoogle Scholar
  3. Ben-Porath E, Dekel E, Lipman BL (2019) Mechanisms with evidence: commitment and robustness. Econometrica 87(2):529–566CrossRefGoogle Scholar
  4. Bergemann D, Morris S (2005) Robust mechanism design. Econometrica 6:1771–1813CrossRefGoogle Scholar
  5. Bergemann D, Morris S (2011) Robust implementation in general mechanisms. Games Econ Behav 71:261–281CrossRefGoogle Scholar
  6. Bikhchandani S (2006) Ex post implementation in environments with private goods. Theor Econ 1:369–393Google Scholar
  7. Bull J, Watson J (2007) Hard evidence and mechanism design. Games Econ Behav 58:75–93CrossRefGoogle Scholar
  8. Crawford V, Sobel J (1982) Strategic information transmission. Econometrica 50:1431–1451CrossRefGoogle Scholar
  9. Dasgupta P, Maskin E (2000) Efficient auctions. Q J Econ 115(2):341–388CrossRefGoogle Scholar
  10. Deneckere R, Severinov S (2008) Mechanism design with partial state verifiability. Games Econ Behav 64:487–513CrossRefGoogle Scholar
  11. Dziuda W (2011) Strategic argumentation. J Econ Theory 146(4):1362–1397CrossRefGoogle Scholar
  12. Forges F, Koessler F (2005) Communication equilibria with partially verifiable types. J Math Econ 41(7):793–811CrossRefGoogle Scholar
  13. Fudenberg D, Tirole J (1991) Perfect bayesian equilibrium and sequential equilibrium. J Econ Theory 53:236–260CrossRefGoogle Scholar
  14. Giovannoni F, Seidmann DJ (2007) Secrecy, two-sided bias and the value of evidence. Games Econ Behav 59:296–315CrossRefGoogle Scholar
  15. Glazer J, Rubinstein A (2004) On optimal rules of persuasion. Econometrica 72:1715–1736CrossRefGoogle Scholar
  16. Glazer J, Rubinstein A (2006) A study in the pragmatics of persuasion: a game theoretical approach. Theor Econ 1:395–410Google Scholar
  17. Green JR, Laffont J-J (1986) Partially verifiable information and mechanism design. Rev Econ Stud 53:447–56CrossRefGoogle Scholar
  18. Grossman SJ (1981) The informational role of warranties and private disclosure about product quality. J Law Econ 24:461–483CrossRefGoogle Scholar
  19. Grossman SJ, Hart OD (1980) Disclosure laws and takeover bids. J Finance 35(2):323–334CrossRefGoogle Scholar
  20. Hagenbach J, Koessler F, Perez-Richet E (2014) Certifiable pre-play communication: full disclosure. Econometrica 82(3):1093–1131CrossRefGoogle Scholar
  21. Hart S, Kremer I, Perry M (2017) Evidence games: truth and commitment. Am Econ Rev 107(3):690–703CrossRefGoogle Scholar
  22. Jehiel P, Meyer-Ter-Vehn M, Moldovanu B, Zame WR (2006) The limits of ex post implementation. Econometrica 3:585–610CrossRefGoogle Scholar
  23. Kartik N, Tercieux O (2012) Implementation with evidence. Theor Econ 7(2):323–355CrossRefGoogle Scholar
  24. Lipman BL, Seppi DJ (1995) Robust inference in communication games with partial provability. J Econ Theory 66(2):370–405CrossRefGoogle Scholar
  25. Milgrom P (1981) Good news and bad news: representation theorems and applications. Bell J Econ 12:380–391CrossRefGoogle Scholar
  26. Milgrom P, Roberts J (1986) Relying on the information of interested parties. Rand J Econ 17(1):18–32CrossRefGoogle Scholar
  27. Myerson RB, Satterthwaite MA (1983) Efficient mechanisms for bilateral trading. J Econ Theory 29:265–281CrossRefGoogle Scholar
  28. Okuno-Fujiwara A, Postlewaite M, Suzumura K (1990) Strategic information revelation. Rev Econ Stud 57:25–47CrossRefGoogle Scholar
  29. Seidmann DJ, Winter E (1997) Strategic information transmission with verifiable messages. Econometrica 65:163–169CrossRefGoogle Scholar
  30. Sher I (2011) Credibility and determinism in a game of persuasion. Games Econ Behav 71(2):409–419CrossRefGoogle Scholar
  31. Sher I (2014) Persuasion and dynamic communication. Theor Econ 9:99–136CrossRefGoogle Scholar
  32. Sher I, Vohra R (2015) Price discrimination through communication. Theor Econ 10(2):597–648Google Scholar
  33. Shin HS (2003) Disclosures and asset returns. Econometrica 71:105–133CrossRefGoogle Scholar
  34. Singh N, Wittman D (2001) Implementation with partial verification. Rev Econ Des 6:63–84Google Scholar
  35. Strausz R (2016) Mechanism design with partially verifiable information. Mimeo, BerlinCrossRefGoogle Scholar
  36. Wolinsky A (2003) Information transmission when the sender’s preferences are uncertain. Games Econ Behav 42:319–326CrossRefGoogle Scholar

Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2019

Authors and Affiliations

  1. 1.Paris School of Economics-CNRSParisFrance
  2. 2.Economics DepartmentSciences Po ParisParisFrance

Personalised recommendations