Mechanism Design with Partially Verifiable Information

Author:

Strausz, Roland (Humboldt University Berlin)

Abstract:

In mechanism design with (partially) verifiable information, the revelation principle holds if allocations are modelled as the Cartesian product of outcomes and verifiable information, giving rise to evidence-contingent mechanisms. Consequently, incentive constraints characterize the implementable set. The revelation principle does not hold when an allocation is modelled as only an outcome so that mechanisms are non-contingent. Yet, any outcome implementable by an evidence-contingent mechanism is implementable by a non-contingent mechanism, provided it can both extend and restrict reporting information. A type-independent bad outcome implies the latter property.

Keywords:

revelation principle; mechanism design; verifiable information

JEL-Classification:

D82

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Mechanism Design with Partially Verifiable Information