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Mechanism design with partial state verifiability

  • Deneckere, Raymond
  • Severinov, Sergei
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    We study implementation in environments where agents have limited ability to imitate others. Agents are randomly and privately endowed with type-dependent sets of messages. So sending a message becomes a partial proof regarding type. For environments where agents can send any combination of available messages, we develop an Extended Revelation Principle and characterize the incentive constraints which implementable allocations must satisfy. When not all message combinations are feasible, static mechanisms no longer suffice. If a 'punishment' allocation exists for each agent, then implementable allocations can be characterized as equilibria of a "Revelation Game," in which agents first select from the menus of allocation rules, then the mediator requests each agent to send some verifying messages. When a punishment allocation fails to exist for some agent, dynamic games in which agents gradually reveal their evidence implement a larger set of outcomes. The latter result provides a foundation for a theory of debate.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0899-8256(08)00036-5
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    Article provided by Elsevier in its journal Games and Economic Behavior.

    Volume (Year): 64 (2008)
    Issue (Month): 2 (November)
    Pages: 487-513

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    Handle: RePEc:eee:gamebe:v:64:y:2008:i:2:p:487-513
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622836

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