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The Revelation Principle in Multistage Games
[Information Feedback in a Dynamic Tournament]

Author

Listed:
  • Takuo Sugaya
  • Alexander Wolitzky

Abstract

The communication revelation principle (RP) of mechanism design states that any outcome that can be implemented using any communication system can also be implemented by an incentive-compatible direct mechanism. In multistage games, we show that in general the communication RP fails for the solution concept of sequential equilibrium (SE). However, it holds in important classes of games, including single-agent games, games with pure adverse selection, games with pure moral hazard, and a class of social learning games. For general multistage games, we establish that an outcome is implementable in SE if and only if it is implementable in a canonical Nash equilibrium in which players never take codominated actions. We also prove that the communication RP holds for the more permissive solution concept of conditional probability perfect Bayesian equilibrium.

Suggested Citation

  • Takuo Sugaya & Alexander Wolitzky, 2021. "The Revelation Principle in Multistage Games [Information Feedback in a Dynamic Tournament]," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 88(3), pages 1503-1540.
    • Handle: RePEc:oup:restud:v:88:y:2021:i:3:p:1503-1540.
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    File URL: http://hdl.handle.net/10.1093/restud/rdaa041
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    Citations

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    Cited by:

    1. Luo, Xiao & Qiao, Yongchuan & Sun, Yang, 2022. "A revelation principle for correlated equilibrium under trembling-hand perfection," Journal of Economic Theory, Elsevier, vol. 200(C).
    2. Sebastian Schweighofer-Kodritsch & Roland Strausz, 2023. "Principled Mechanism Design with Evidence," Berlin School of Economics Discussion Papers 0030, Berlin School of Economics.
    3. Papadimitriou, Christos & Pierrakos, George & Psomas, Alexandros & Rubinstein, Aviad, 2022. "On the complexity of dynamic mechanism design," Games and Economic Behavior, Elsevier, vol. 134(C), pages 399-427.

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