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The Role of the Common Prior in Robust Implementation

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Author Info
Dirk Bergemann () (Cowles Foundation, Yale University)
Stephen Morris (Dept. of Economics, Princeton University)

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Abstract

We consider the role of the common prior for robust implementation in an environment with interdependent values. Specifically, we investigate a model of public good provision which allows for negative and positive informational externalities. In the corresponding direct mechanism, the agents' reporting strategies are strategic complements with negative informational externalities and strategic substitutes with positive informational externalities. We derive the necessary and sufficient conditions for robust implementation in common prior type spaces and contrast this with our earlier results without the common prior. In the case of strategic complements the necessary and sufficient conditions for robust implementation do not depend on the existence of a common prior. In contrast, with strategic substitutes, the implementation conditions are much weaker under the common prior assumption.

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File URL: http://cowles.econ.yale.edu/P/cd/d16a/d1628.pdf
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Publisher Info
Paper provided by Cowles Foundation, Yale University in its series Cowles Foundation Discussion Papers with number 1628.

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Length: 12 pages
Date of creation: Sep 2007
Date of revision:
Publication status: Published in Journal of the European Economic Association (April-May 2008), 6(2-3): 551-559
Handle: RePEc:cwl:cwldpp:1628

Note: CFP 1225.
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Postal: Cowles Foundation, Yale University, Box 208281, New Haven, CT 06520-8281 USA

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Related research
Keywords: Common prior; Correlated equilibrium; Ex post equilibrium; Mechanism design; Robust implementation; Rationalizability; Strategic complements; Strategic substitutes; Uniqueness;

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Find related papers by JEL classification:
C79 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Other
D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Aumann, Robert J, 1987. "Correlated Equilibrium as an Expression of Bayesian Rationality," Econometrica, Econometric Society, vol. 55(1), pages 1-18, January. [Downloadable!] (restricted)
  2. Partha Dasgupta & Eric Maskin, 2000. "Efficient Auctions," The Quarterly Journal of Economics, MIT Press, vol. 115(2), pages 341-388, May. [Downloadable!] (restricted)
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  3. Dirk Bergemann & Stephen Morris, 2007. "Belief Free Incomplete Information Games," Levine's Bibliography 122247000000001569, UCLA Department of Economics. [Downloadable!]
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  4. Dirk Bergemann & Stephen Morris, 2007. "Strategic Distinguishability with an Application to Robust Virtual Implementation," Cowles Foundation Discussion Papers 1609, Cowles Foundation, Yale University. [Downloadable!]
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  5. Dirk Bergemann & Juuso Valimaki, 2002. "Information Acquisition and Efficient Mechanism Design," Econometrica, Econometric Society, vol. 70(3), pages 1007-1033, May. [Downloadable!] (restricted)
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  6. repec:bep:theadv:v:3:y:2003:i:1:p:1073-1073 is not listed on IDEAS
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  7. FORGESÊ, Franoise, 1993. "Five Legitimate Definitions of Correlated Equilibrium in Games with Incomplete Information," CORE Discussion Papers 1993009, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  8. Abraham Neyman, 1997. "Correlated Equilibrium and Potential Games," International Journal of Game Theory, Springer, vol. 26(2), pages 223-227.
  9. Brandenburger, Adam & Dekel, Eddie, 1987. "Rationalizability and Correlated Equilibria," Econometrica, Econometric Society, vol. 55(6), pages 1391-1402, November. [Downloadable!] (restricted)
  10. Monderer, Dov & Shapley, Lloyd S., 1996. "Potential Games," Games and Economic Behavior, Elsevier, vol. 14(1), pages 124-143, May. [Downloadable!] (restricted)
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  1. Bergemann, Dirk & Stephen Morris, 2006. "Robust Implementation in Direct Mechanisms," Cowles Foundation Discussion Papers 1561RR, Cowles Foundation, Yale University, revised Jan 2009. [Downloadable!]
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