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Information disclosure and full surplus extraction in mechanism design

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  • Krähmer, Daniel

Abstract

I study mechanism design settings with quasi-linear utility where the principal can provide agents with additional private information about their valuations beyond the private information they hold at the outset. I demonstrate that the principal can design information and a mechanism so as to implement the same outcome as if the additional information was publicly known. The key idea is that the principal secretly randomizes over information structures which allows her to cross-check the consistency of agents' reports. As an implication, the principal can fully extract the first-best surplus in a large class of cases.

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  • Krähmer, Daniel, 2020. "Information disclosure and full surplus extraction in mechanism design," Journal of Economic Theory, Elsevier, vol. 187(C).
    • Handle: RePEc:eee:jetheo:v:187:y:2020:i:c:s0022053120300259
    DOI: 10.1016/j.jet.2020.105020
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    References listed on IDEAS

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    Cited by:

    1. Larionov, Daniil & Pham, Hien & Yamashita, Takuro & Zhu, Shuguang, 2021. "First Best Implementation with Costly Information Acquisition," TSE Working Papers 21-1261, Toulouse School of Economics (TSE), revised Apr 2022.

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    More about this item

    Keywords

    Information design; Mechanism design; Quasi-linear utility; Rent extraction;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement

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