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Implementation with partial provability

  • Ben-Porath, Elchanan
  • Lipman, Barton L.

We extend implementation theory by allowing the social choice function to depend on more than just the preferences of the agents and allowing agents to support their statements with hard evidence. We show that a simple condition on evidence is necessary for the implementation of a social choice function f when the preferences of the agents are state independent and sufficient for implementation for any preferences (including state dependent) with at least three agents if the social planner can perform small monetary transfers beyond those called for by f. If transfers can be large, f can be implemented in a game with perfect information when there are at least two players under a boundedness assumption. For both results, transfers only occur out of equilibrium. The use of evidence enables implementation which is robust in the sense that the planner needs little information about agentsʼ preferences or beliefs and agents need little information about each othersʼ preferences. Our results are robust to evidence forgery at any strictly positive cost.

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Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 147 (2012)
Issue (Month): 5 ()
Pages: 1689-1724

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Handle: RePEc:eee:jetheo:v:147:y:2012:i:5:p:1689-1724
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  1. 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.
  2. Abreu, Dilip & Sen, Arunava, 1990. "Subgame perfect implementation: A necessary and almost sufficient condition," Journal of Economic Theory, Elsevier, vol. 50(2), pages 285-299, April.
  3. F. Forges & Frederic Koessler, 2003. "Communication Equilibria with Partially Verifiable Types," THEMA Working Papers 2003-10, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
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  8. Rubinstein, Ariel & Glazer, Jacob, 2006. "A study in the pragmatics of persuasion: a game theoretical approach," Theoretical Economics, Econometric Society, vol. 1(4), pages 395-410, December.
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  10. Joel Watson & Jesse Bull, 2004. "Hard Evidence and Mechanism Design," Econometric Society 2004 North American Winter Meetings 433, Econometric Society.
  11. Baliga, Sandeep, 1999. "Implementation in Economic Environments with Incomplete Information: The Use of Multi-Stage Games," Games and Economic Behavior, Elsevier, vol. 27(2), pages 173-183, May.
  12. Daniel J. Seidmann & Eyal Winter, 1997. "Strategic Information Transmission with Verifiable Messages," Econometrica, Econometric Society, vol. 65(1), pages 163-170, January.
  13. Jackson, Matthew O, 1991. "Bayesian Implementation," Econometrica, Econometric Society, vol. 59(2), pages 461-77, March.
  14. Frédéric Koessler & Francoise Forges, 2008. "Long persuasion games," Post-Print hal-00360719, HAL.
  15. A. Rubinstein & J. Glazer, . "Debates and Decisions, On a Rationale of Argumentation Rules," Princeton Economic Theory Papers 00s7, Economics Department, Princeton University.
  16. Dutta, Bhaskar & Sen, Arunava, 2012. "Nash implementation with partially honest individuals," Games and Economic Behavior, Elsevier, vol. 74(1), pages 154-169.
  17. Moore, John & Repullo, Rafael, 1988. "Subgame Perfect Implementation," Econometrica, Econometric Society, vol. 56(5), pages 1191-1220, September.
  18. Jerry R. Green & Jean-Jacques Laffont, 1986. "Partially Verifiable Information and Mechanism Design," Review of Economic Studies, Oxford University Press, vol. 53(3), pages 447-456.
  19. Itai Sher, 2008. "Persuasion and Limited Communication," Levine's Bibliography 122247000000002132, UCLA Department of Economics.
  20. Martin J. Osborne & Ariel Rubinstein, 1994. "A Course in Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262650401, December.
  21. Deneckere, Raymond & Severinov, Sergei, 2008. "Mechanism design with partial state verifiability," Games and Economic Behavior, Elsevier, vol. 64(2), pages 487-513, November.
  22. Grossman, S J & Hart, O D, 1980. " Disclosure Laws and Takeover Bids," Journal of Finance, American Finance Association, vol. 35(2), pages 323-34, May.
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  25. Jacob Glazer & Ariel Rubinstein, 2004. "On Optimal Rules of Persuasion," Econometrica, Econometric Society, vol. 72(6), pages 1715-1736, November.
  26. Abreu, Dilip & Matsushima, Hitoshi, 1992. "A Response [Virtual Implementation in Iteratively Undominated Strategies I: Complete Information]," Econometrica, Econometric Society, vol. 60(6), pages 1439-42, November.
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  28. Navin Kartik & Olivier Tercieux, 2012. "Implementation with Evidence," PSE - Labex "OSE-Ouvrir la Science Economique" halshs-00754592, HAL.
  29. Abreu, Dilip & Matsushima, Hitoshi, 1992. "Virtual Implementation in Iteratively Undominated Strategies: Complete Information," Econometrica, Econometric Society, vol. 60(5), pages 993-1008, September.
  30. Masahiro Okuno-Fujiwara & Andrew Postlewaite & Kotaro Suzumura, 1990. "Strategic Information Revelation," Review of Economic Studies, Oxford University Press, vol. 57(1), pages 25-47.
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  32. Michael J. Fishman & Kathleen M. Hagerty, 1990. "The Optimal Amount of Discretion to Allow in Disclosure," The Quarterly Journal of Economics, Oxford University Press, vol. 105(2), pages 427-444.
  33. Andrew Postlewaite & David Wettstein, 1989. "Feasible and Continuous Implementation," Review of Economic Studies, Oxford University Press, vol. 56(4), pages 603-611.
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