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Ratifiable Mechanisms: Learning from Disagreement

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Abstract

In a mechanism design problem, participation constraints require that all types prefer the proposed mechanism to some status quo. If equilibrium play in the status quo mechanism depends on the players' beliefs, then the inference drawn if someone objects to the proposed mechanism may alter the participation constraints. We investigate this issue by modeling the mechanism design problem as a two-stage process, consisting of a ratification stage followed by the actual play of the chosen game. We develop and illustrate a new concept, ratifiability, that takes account of inferences from a veto in a consistent way.

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File URL: http://www.cramton.umd.edu/papers1995-1999/95geb-ratifiable-mechanisms.pdf
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Bibliographic Info

Paper provided by University of Maryland, Department of Economics - Peter Cramton in its series Papers of Peter Cramton with number 95geb.

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Length: 29 pages
Date of creation: 1995
Date of revision: 09 Jun 1998
Publication status: Published in Games and Economic Behavior, 10:2, August 1995, pages 255-283.
Handle: RePEc:pcc:pccumd:95geb

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Postal: Economics Department, University of Maryland, College Park, MD 20742-7211
Phone: (202) 318-0520
Fax: (202) 318-0520
Web page: http://www.cramton.umd.edu

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Keywords: Sequential Games; Mechanism Design; Private Information;

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  1. Roger B. Myerson & Mark A. Satterthwaite, 1981. "Efficient Mechanisms for Bilateral Trading," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 469S, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  2. Peter Cramton, 1985. "Sequential Bargaining Mechanisms," Papers of Peter Cramton, University of Maryland, Department of Economics - Peter Cramton 85roth, University of Maryland, Department of Economics - Peter Cramton, revised 09 Jun 1998.
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  15. Banks, Jeffrey S & Sobel, Joel, 1987. "Equilibrium Selection in Signaling Games," Econometrica, Econometric Society, Econometric Society, vol. 55(3), pages 647-61, May.
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  18. Roberts, Kevin, 1985. "Cartel Behaviour and Adverse Selection," Journal of Industrial Economics, Wiley Blackwell, Wiley Blackwell, vol. 33(4), pages 401-13, June.
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