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Evidence Games: Truth and Commitment

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  • Hart, Sergiu
  • Kremer, Ilan
  • Perry, Motty

Abstract

An evidence game is a strategic disclosure game in which an informed agent who has some pieces of verifiable evidence decides which ones to disclose to an uninformed principal who chooses a reward. The agent, regardless of his information, prefers the reward to be as high as possible. We compare the setup where the principal chooses the reward after the evidence is disclosed to the mechanism-design setup where he can commit in advance to a reward policy. The main result is that under natural conditions on the truth structure of the evidence, the two setups yield the same equilibrium outcome.

Suggested Citation

  • Hart, Sergiu & Kremer, Ilan & Perry, Motty, 2015. "Evidence Games: Truth and Commitment," Economic Research Papers 270003, University of Warwick - Department of Economics.
    • Handle: RePEc:ags:uwarer:270003
    DOI: 10.22004/ag.econ.270003
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    References listed on IDEAS

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    1. Grossman, Sanford J, 1981. "The Informational Role of Warranties and Private Disclosure about Product Quality," Journal of Law and Economics, University of Chicago Press, vol. 24(3), pages 461-483, December.
    2. Bull, Jesse & Watson, Joel, 2007. "Hard evidence and mechanism design," Games and Economic Behavior, Elsevier, vol. 58(1), pages 75-93, January.
    3. Ben-Porath, Elchanan & Lipman, Barton L., 2012. "Implementation with partial provability," Journal of Economic Theory, Elsevier, vol. 147(5), pages 1689-1724.
    4. Pae, Suil, 2005. "Selective disclosures in the presence of uncertainty about information endowment," Journal of Accounting and Economics, Elsevier, vol. 39(3), pages 383-409, September.
    5. Sher, Itai, 2011. "Credibility and determinism in a game of persuasion," Games and Economic Behavior, Elsevier, vol. 71(2), pages 409-419, March.
    6. Paul R. Milgrom, 1981. "Good News and Bad News: Representation Theorems and Applications," Bell Journal of Economics, The RAND Corporation, vol. 12(2), pages 380-391, Autumn.
    7. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, Oxford University Press, vol. 84(3), pages 488-500.
    8. Ilan Guttman & Ilan Kremer & Andrzej Skrzypacz, 2014. "Not Only What but Also When: A Theory of Dynamic Voluntary Disclosure," American Economic Review, American Economic Association, vol. 104(8), pages 2400-2420, August.
    9. repec:pit:wpaper:453 is not listed on IDEAS
    10. Hyun Song Shin, 2006. "Disclosure Risk and Price Drift," Journal of Accounting Research, Wiley Blackwell, vol. 44(2), pages 351-379, May.
    11. Glazer, Jacob & Rubinstein, Ariel, 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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    Citations

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    Cited by:

    1. Pierpaolo Battigalli & Pietro Tebaldi, 2019. "Interactive epistemology in simple dynamic games with a continuum of strategies," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 68(3), pages 737-763, October.
    2. Alessandro Ispano & Péter Vida, 2020. "Custodial Interrogations," THEMA Working Papers 2020-05, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    3. Wu, Jiemai, 2020. "Non-competing persuaders," European Economic Review, Elsevier, vol. 127(C).
    4. Frenkel, Sivan & Guttman, Ilan & Kremer, Ilan, 2020. "The effect of exogenous information on voluntary disclosure and market quality," Journal of Financial Economics, Elsevier, vol. 138(1), pages 176-192.
    5. Cheng Li, 2020. "Centralized policymaking and informational lobbying," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 54(4), pages 527-557, April.
    6. Shaofei Jiang, 2020. "Equilibrium Refinement in Finite Evidence Games," Papers 2007.06403, arXiv.org.
    7. Schopohl, Simon, 2019. "Full revelation under optional verification," Economics Letters, Elsevier, vol. 176(C), pages 14-16.
    8. Frédéric Koessler & Eduardo Perez-Richet, 2019. "Evidence reading mechanisms," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 53(3), pages 375-397, October.
    9. Matthias Lang, 2020. "Mechanism Design with Narratives," CESifo Working Paper Series 8502, CESifo.
    10. Sumit Goel & Wade Hann-Caruthers, 2020. "Project selection with partially verifiable information," Papers 2007.00907, arXiv.org.
    11. Winand Emons & Claude Fluet, 2019. "Strategic communication with reporting costs," Theory and Decision, Springer, vol. 87(3), pages 341-363, October.
    12. Bhattacharya, Sourav & Goltsman, Maria & Mukherjee, Arijit, 2018. "On the optimality of diverse expert panels in persuasion games," Games and Economic Behavior, Elsevier, vol. 107(C), pages 345-363.
    13. Shaofei Jiang, 2019. "Disclosure Games with Large Evidence Spaces," Papers 1910.13633, arXiv.org, revised Dec 2020.

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    More about this item

    Keywords

    Financial Economics;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process

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