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Mechanism Design with Moderate Evidence Cost

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  • Bull Jesse

    (Florida International University, bullj@fiu.edu)

Abstract

This paper addresses how a moderate evidence disclosure cost can be incorporated into mechanism-design analysis. The paper shows that in public-action settings with transferable utility one can restrict attention to a class of three-stage dynamic mechanisms. Under complete information with two or more players, a version of this type of mechanism can be used to eliminate evidence production in equilibrium. The paper also provides conditions on the evidence environment under which the class of mechanisms studied in Bull and Watson (2004) is equivalent to those considered here.

Suggested Citation

  • Bull Jesse, 2008. "Mechanism Design with Moderate Evidence Cost," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 8(1), pages 1-20, May.
    • Handle: RePEc:bpj:bejtec:v:8:y:2008:i:1:n:15
    DOI: 10.2202/1935-1704.1446
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    References listed on IDEAS

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    1. Deneckere,R. & Severinov,S., 2001. "Mechanism design and communication costs," Working papers 23, Wisconsin Madison - Social Systems.
    2. Lipman Barton L. & Seppi Duane J., 1995. "Robust Inference in Communication Games with Partial Provability," Journal of Economic Theory, Elsevier, vol. 66(2), pages 370-405, August.
    3. Bull Jesse, 2008. "Costly Evidence Production and the Limits of Verifiability," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 8(1), pages 1-28, July.
    4. Evans, R., 2006. "Mechanism Design with Renegotiation and Costly Messages," Cambridge Working Papers in Economics 0626, Faculty of Economics, University of Cambridge.
    5. Bull, Jesse & Watson, Joel, 2007. "Hard evidence and mechanism design," Games and Economic Behavior, Elsevier, vol. 58(1), pages 75-93, January.
    6. Watson, Joel, 2006. "Contract, Mechanism Design, and Technological Detail," University of California at San Diego, Economics Working Paper Series qt2m08n7cg, Department of Economics, UC San Diego.
    7. Bull, Jesse & Watson, Joel, 2000. "Evidence Disclosure and Verifiability," University of California at San Diego, Economics Working Paper Series qt6th0060j, Department of Economics, UC San Diego.
    8. Bull, Jesse & Watson, Joel, 2002. "Evidence Disclosure and Verfiability," University of California at San Diego, Economics Working Paper Series qt19p7z2gm, Department of Economics, UC San Diego.
    9. Jacob Glazer & Ariel Rubinstein, 2004. "On Optimal Rules of Persuasion," Econometrica, Econometric Society, vol. 72(6), pages 1715-1736, November.
    10. Joel Watson, 2007. "Contract, Mechanism Design, and Technological Detail," Econometrica, Econometric Society, vol. 75(1), pages 55-81, January.
    11. Jerry R. Green & Jean-Jacques Laffont, 1986. "Partially Verifiable Information and Mechanism Design," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 53(3), pages 447-456.
    12. Watson, Joel, 2002. "Contract, Mechanism Design, and Technological Detail," University of California at San Diego, Economics Working Paper Series qt18x0r2nn, Department of Economics, UC San Diego.
    13. , & ,, 2006. "A study in the pragmatics of persuasion: a game theoretical approach," Theoretical Economics, Econometric Society, vol. 1(4), pages 395-410, December.
    14. Bull, Jesse & Watson, Joel, 2004. "Evidence disclosure and verifiability," Journal of Economic Theory, Elsevier, vol. 118(1), pages 1-31, September.
    15. Bull, Jesse & Watson, Joel, 2002. "Hard Evidence and Mechanism Design," University of California at San Diego, Economics Working Paper Series qt7715f08f, Department of Economics, UC San Diego.
    16. Watson, Joel & Bull, Jesse, 2006. "Hard Evidence and Mechanism Design," University of California at San Diego, Economics Working Paper Series qt7973v805, Department of Economics, UC San Diego.
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    Cited by:

    1. Jesse Bull & Joel Watson, 2019. "Statistical evidence and the problem of robust litigation," RAND Journal of Economics, RAND Corporation, vol. 50(4), pages 974-1003, December.
    2. Mehdi Ayouni & Frédéric Koessler, 2017. "Hard evidence and ambiguity aversion," Theory and Decision, Springer, vol. 82(3), pages 327-339, March.
    3. Strausz, Roland, 2017. "Mechanism Design with Partially Verifiable Information," Rationality and Competition Discussion Paper Series 45, CRC TRR 190 Rationality and Competition.
    4. Bull, Jesse & Watson, Joel, 2019. "Statistical evidence and the problem of robust litigation," University of California at San Diego, Economics Working Paper Series qt4110q2cb, Department of Economics, UC San Diego.
    5. Jesse Bull, 2013. "Interrogation and Evidence Fabrication," Working Papers 1303, Florida International University, Department of Economics.

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