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Communication Complexity and Mechanism Design

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  • Timothy Van Zandt

Abstract

The curse of the Revelation Principle is that it leads us to focus on unrealistic mechanisms in which agents report all private information to the principal, who then makes all decisions centrally. This is not true when communication costs are introduced. In that case, partial communication of information, sequential back-and-forth conversations, and decentralization of decisions become part of optimal mechanisms. This paper looks at the interplay between the incentive constraints and the communication constraints. When can they be separated so that, for example, one can separately study the incentive compatibility of a social choice rule and the minimum-cost communication protocol that realizes the social choice rule? (JEL: D82, C72) (c) 2007 by the European Economic Association.

Suggested Citation

  • Timothy Van Zandt, 2007. "Communication Complexity and Mechanism Design," Journal of the European Economic Association, MIT Press, vol. 5(2-3), pages 543-553, 04-05.
  • Handle: RePEc:tpr:jeurec:v:5:y:2007:i:2-3:p:543-553
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Tomala, Tristan & Renou, Ludovic, 2012. "Mechanism design and communication networks," Theoretical Economics, Econometric Society, vol. 7(3), September.
    2. Tomala, Tristan & Renou, Ludovic, 2012. "Mechanism design and communication networks," Theoretical Economics, Econometric Society, vol. 7(3), September.
    3. Timothy Van Zandt, 2008. "The Interplay Between Incentives and Communication Complexity in Mechanism Design," 2008 Meeting Papers 480, Society for Economic Dynamics.
    4. Dietrichson, Jens & Jochem, Torsten, 2014. "Organizational coordination and costly communication with boundedly rational agents," Comparative Institutional Analysis Working Paper Series 2014:1, Lund University, Comparative Institutional Analysis, School of Economics and Management.
    5. Ryuji Sano, 2016. "Iterative Revelation Mechanisms," KIER Working Papers 937, Kyoto University, Institute of Economic Research.
    6. Tomala, Tristan & Renou, Ludovic, 2012. "Mechanism design and communication networks," Theoretical Economics, Econometric Society, vol. 7(3), September.
    7. Tomala, Tristan & Renou, Ludovic, 2012. "Mechanism design and communication networks," Theoretical Economics, Econometric Society, vol. 7(3), September.
    8. Tomala, Tristan & Renou, Ludovic, 2012. "Mechanism design and communication networks," Theoretical Economics, Econometric Society, vol. 7(3), September.

    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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