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First Best Implementation With Costly Information Acquisition

Author

Listed:
  • Daniil Larionov
  • Hien Pham
  • Takuro Yamashita
  • Shuguang Zhu

Abstract

We study mechanism design with flexible but costly information acquisition. There is one principal and four or more agents, who share a common prior belief over a set of payoff‐relevant states. The principal proposes a mechanism to the agents, each of whom can then acquire information about the state by privately designing a signal device. As long as it is costless for each agent to acquire a signal that is independent of the state, there exists a mechanism that allows the principal to implement any social choice rule at zero information acquisition cost for the agents.

Suggested Citation

  • Daniil Larionov & Hien Pham & Takuro Yamashita & Shuguang Zhu, 2025. "First Best Implementation With Costly Information Acquisition," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 34(4), pages 889-898, November.
    • Handle: RePEc:bla:jemstr:v:34:y:2025:i:4:p:889-898
    DOI: 10.1111/jems.12628
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    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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