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Mechanism design with information acquisition

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  • Sushil Bikhchandani
  • Ichiro Obara

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Abstract

Abstract Consider a mechanism design setting in which agents acquire costly information about an unknown, payoff-relevant state of nature before participating in the mechanism. Information gathering is covert. We investigate conditions under which (i) efficient implementation and (ii) full surplus extraction are Bayesian incentive compatible and interim individually rational.

Suggested Citation

  • Sushil Bikhchandani & Ichiro Obara, 2017. "Mechanism design with information acquisition," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 63(3), pages 783-812, March.
  • Handle: RePEc:spr:joecth:v:63:y:2017:i:3:d:10.1007_s00199-016-0964-5
    DOI: 10.1007/s00199-016-0964-5
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    References listed on IDEAS

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    More about this item

    Keywords

    Information acquisition; Full surplus extraction; Efficient implementation; Mechanism design; Bayesian implementation;

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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