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Gradual Revelation Mechanism with Two-Sided Screening

Author

Listed:
  • Helena Hye-Young Kim

    (Department of Economics, Korea University)

  • Frans Spinnewyn

    (Department of Economic, K.U.Leuven)

  • Luc Lauwers

    (Department of Economic, K.U.Leuven)

Abstract

We investigate the mechanism that provides the optimal decision rule for two agents making joint decisions. It is shown that, a special rectangular mechanism with two sided screening, elicit correct information when agents?preferences are private information. Such mechanism is presented as a game of incomplete information. It is shown that if types are uniformly distributed, then a three stage sequential game with an exogenously given probability of a terminal break down cannot be improved upon within a restricted class of models.

Suggested Citation

  • Helena Hye-Young Kim & Frans Spinnewyn & Luc Lauwers, 2007. "Gradual Revelation Mechanism with Two-Sided Screening," Discussion Paper Series 0710, Institute of Economic Research, Korea University.
    • Handle: RePEc:iek:wpaper:0710
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    File URL: http://econ.korea.ac.kr/~ri/WorkingPapers/w0710.pdf
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    References listed on IDEAS

    as
    1. Masahiro Okuno-Fujiwara & Andrew Postlewaite & Kotaro Suzumura, 1990. "Strategic Information Revelation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 57(1), pages 25-47.
    2. Myerson, Roger B, 1984. "Two-Person Bargaining Problems with Incomplete Information," Econometrica, Econometric Society, vol. 52(2), pages 461-487, March.
    3. Myerson, Roger B, 1979. "Incentive Compatibility and the Bargaining Problem," Econometrica, Econometric Society, vol. 47(1), pages 61-73, January.
    4. Wolinsky, Asher, 1990. "Information Revelation in a Market with Pairwise Meetings," Econometrica, Econometric Society, vol. 58(1), pages 1-23, January.
    5. Abreu Dilip & Matsushima Hitoshi, 1994. "Exact Implementation," Journal of Economic Theory, Elsevier, vol. 64(1), pages 1-19, October.
    6. d'Aspremont, Claude & Gerard-Varet, Louis-Andre, 1979. "Incentives and incomplete information," Journal of Public Economics, Elsevier, vol. 11(1), pages 25-45, February.
    Full references (including those not matched with items on IDEAS)

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    Keywords

    Mechanism Design; Efficiency; Risk Limit;
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