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Direct Implementation with Evidence

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  • Soumen Banerjee
  • Yi-Chun Chen
  • Yifei Sun

Abstract

We study full implementation with evidence in an environment with bounded utilities. We show that a social choice function is Nash implementable in a direct revelation mechanism if and only if it satisfies the measurability condition proposed by BL2012 . Building on a novel classification of lies according to their refutability with evidence, the mechanism requires only two agents, accounts for mixed-strategy equilibria and accommodates evidentiary costs. While monetary transfers are used, they are off the equilibrium and can be balanced with three or more agents. In a richer model of evidence due to KT2012 , we establish pure-strategy implementation with two or more agents in a direct revelation mechanism. We also obtain a necessary and sufficient condition on the evidence structure for renegotiation-proof bilateral contracts, based on the classification of lies.

Suggested Citation

  • Soumen Banerjee & Yi-Chun Chen & Yifei Sun, 2021. "Direct Implementation with Evidence," Papers 2105.12298, arXiv.org, revised May 2023.
    • Handle: RePEc:arx:papers:2105.12298
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    References listed on IDEAS

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    1. Moore, John & Repullo, Rafael, 1988. "Subgame Perfect Implementation," Econometrica, Econometric Society, vol. 56(5), pages 1191-1220, September.
    2. Eric Maskin & John Moore, 1999. "Implementation and Renegotiation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 66(1), pages 39-56.
    3. Matthew O. Jackson, 1992. "Implementation in Undominated Strategies: A Look at Bounded Mechanisms," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 59(4), pages 757-775.
    4. , & ,, 2012. "Implementation with evidence," Theoretical Economics, Econometric Society, vol. 7(2), May.
    5. Bull, Jesse & Watson, Joel, 2007. "Hard evidence and mechanism design," Games and Economic Behavior, Elsevier, vol. 58(1), pages 75-93, January.
    6. Eric Maskin, 1999. "Nash Equilibrium and Welfare Optimality," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 66(1), pages 23-38.
    7. Kim-Sau Chung & Jeffrey C. Ely, 2003. "Implementation with Near-Complete Information," Econometrica, Econometric Society, vol. 71(3), pages 857-871, May.
    8. Ben-Porath, Elchanan & Lipman, Barton L., 2012. "Implementation with partial provability," Journal of Economic Theory, Elsevier, vol. 147(5), pages 1689-1724.
    9. Eric Maskin & Jean Tirole, 1999. "Unforeseen Contingencies and Incomplete Contracts," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 66(1), pages 83-114.
    10. Abreu Dilip & Matsushima Hitoshi, 1994. "Exact Implementation," Journal of Economic Theory, Elsevier, vol. 64(1), pages 1-19, October.
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    Cited by:

    1. Azacis, Helmuts & Vida, Peter, 2021. "Fighting Collusion: An Implementation Theory Approach," Cardiff Economics Working Papers E2021/19, Cardiff University, Cardiff Business School, Economics Section.
    2. Soumen Banerjee & Yi-Chun Chen, 2022. "Implementation with Uncertain Evidence," Papers 2209.10741, arXiv.org.

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