Mechanism Design by an Informed Principal - Pure-Strategy Equilibria for a Common Value Model
AbstractWe present a common value mechanism design model for an informed principal where only the principal has private information, but her one-dimensional private information is allowed to be distributed according to any probability measure. For this model we characterize the set of pure-strategy perfect Bayesian equilibria. Furthermore, we present several equilibrium refinements based on the concept of equilibrium domination to take account of beliefs off the equilibrium path. Finally, we demonstrate that the extension of the strong solution of Myerson (Econometrica, 1983) to our model is supported as an equilibrium satisfying all refinement criteria presented (in case a strong solution exists).
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Bibliographic InfoPaper provided by University of Bonn, Germany in its series Bonn Econ Discussion Papers with number bgse21_2002.
Date of creation: Sep 2002
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equilibrium refinement; infinite signaling game; informed principal; mechanism design; perfect Bayesian equilibrium; principle of inscrutability; revelation principle; strong solution;
Find related papers by JEL classification:
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
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