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The Importance of Commitment Power in Games with Imperfect Evidence

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  • Francisco Silva

Abstract

The literature initiated by Green and Laffont (1986) studies principal-agent models with hard evidence. Evidence is modeled by assuming that the message set of the agent is type dependent. In this setup, Glazer and Rubinstein (2004, 2006) and Sher (2011) show that when the agent's utility function is type independent there is no advantage for the principal in having commitment power. This paper shows that this way of modeling evidence implicitly assumes it to be perfectly accurate and that the result that commitment power has no value is not robust to making the evidence imperfect.

Suggested Citation

  • Francisco Silva, 2020. "The Importance of Commitment Power in Games with Imperfect Evidence," American Economic Journal: Microeconomics, American Economic Association, vol. 12(4), pages 99-113, November.
    • Handle: RePEc:aea:aejmic:v:12:y:2020:i:4:p:99-113
    DOI: 10.1257/mic.20180038
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    Cited by:

    1. Pereyra, Juan Sebastián & Silva, Francisco, 2023. "Optimal assignment mechanisms with imperfect verification," Theoretical Economics, Econometric Society, vol. 18(2), May.
    2. Silva, Francisco, 2019. "Renegotiation proof mechanism design with imperfect type verification," Theoretical Economics, Econometric Society, vol. 14(3), July.

    More about this item

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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