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Communication Complexity and Mechanism Design

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  • Timothy Van Zandt

Abstract

The curse of the Revelation Principle is that it leads us to focus on unrealistic mechanisms in which agents report all private information to the principal, who then makes all decisions centrally. This is not true when communication costs are introduced. In that case, partial communication of information, sequential back-and-forth conversations, and decentralization of decisions become part of optimal mechanisms. This paper looks at the interplay between the incentive constraints and the communication constraints. When can they be separated so that, for example, one can separately study the incentive compatibility of a social choice rule and the minimum-cost communication protocol that realizes the social choice rule? (JEL: D82, C72) (c) 2007 by the European Economic Association.

Suggested Citation

  • Timothy Van Zandt, 2007. "Communication Complexity and Mechanism Design," Journal of the European Economic Association, MIT Press, vol. 5(2-3), pages 543-553, 04-05.
    • Handle: RePEc:tpr:jeurec:v:5:y:2007:i:2-3:p:543-553
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    Citations

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    Cited by:

    1. , & ,, 2012. "Mechanism design and communication networks," Theoretical Economics, Econometric Society, vol. 7(3), September.
    2. Irem Bozbay, 2015. "Truth-Tracking Judgment Aggregation Over Interconnected Issues," School of Economics Discussion Papers 0916, School of Economics, University of Surrey.
    3. Irem Bozbay, 2019. "Truth-tracking judgment aggregation over interconnected issues," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 53(2), pages 337-370, August.
    4. Timothy Van Zandt, 2008. "The Interplay Between Incentives and Communication Complexity in Mechanism Design," 2008 Meeting Papers 480, Society for Economic Dynamics.
    5. Dietrichson, Jens & Gudmundsson, Jens & Jochem, Torsten, 2014. "Let's Talk It Over: Communication and Coordination in Teams," Working Papers 2014:2, Lund University, Department of Economics, revised 18 Apr 2018.
    6. Ryuji Sano, 2016. "Iterative Revelation Mechanisms," KIER Working Papers 937, Kyoto University, Institute of Economic Research.
    7. Gorkem Celik, 2015. "Implementation by Gradual Revelation," RAND Journal of Economics, RAND Corporation, vol. 46(2), pages 271-296, June.
    8. Ryuji Sano, 2021. "Dynamic communication mechanism design," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 57(1), pages 163-180, July.
    9. Dilip Mookherjee & Masatoshi Tsumagari, 2014. "Mechanism Design with Communication Constraints," Journal of Political Economy, University of Chicago Press, vol. 122(5), pages 1094-1129.
    10. Ran Eilat & Kfir Eliaz Eliaz & Xiaosheng Mu, 2021. "Bayesian Privacy," Working Papers 2021-65, Princeton University. Economics Department..
    11. Dietrichson, Jens & Jochem, Torsten, 2014. "Organizational coordination and costly communication with boundedly rational agents," Comparative Institutional Analysis Working Paper Series 2014:1, Lund University, Comparative Institutional Analysis, School of Economics and Management.

    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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