IDEAS home Printed from https://ideas.repec.org/p/arx/papers/2112.06032.html
   My bibliography  Save this paper

Robust Implementation with Costly Information

Author

Listed:
  • Harry Pei
  • Bruno Strulovici

Abstract

We study whether a planner can robustly implement a state-contingent social choice function when (i) agents must incur a cost to learn the state and (ii) the planner faces uncertainty regarding agents' preferences over outcomes, information costs, and beliefs and higher-order beliefs about one another's payoffs. We propose mechanisms that can approximately implement any desired social choice function when the perturbations concerning agents' payoffs have small ex ante probability. The mechanism is also robust to trembles in agents' strategies and when agents receive noisy information about the state.

Suggested Citation

  • Harry Pei & Bruno Strulovici, 2021. "Robust Implementation with Costly Information," Papers 2112.06032, arXiv.org.
    • Handle: RePEc:arx:papers:2112.06032
    as

    Download full text from publisher

    File URL: http://arxiv.org/pdf/2112.06032
    File Function: Latest version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ui, Takashi, 2001. "Robust Equilibria of Potential Games," Econometrica, Econometric Society, vol. 69(5), pages 1373-1380, September.
    2. Kim-Sau Chung & J.C. Ely, 2007. "Foundations of Dominant-Strategy Mechanisms," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 74(2), pages 447-476.
    3. Atsushi Kajii & Stephen Morris, 1997. "The Robustness of Equilibria to Incomplete Information," Econometrica, Econometric Society, vol. 65(6), pages 1283-1310, November.
    4. Dirk Bergemann & Stephen Morris, 2012. "Robust Implementation in Direct Mechanisms," World Scientific Book Chapters, in: Robust Mechanism Design The Role of Private Information and Higher Order Beliefs, chapter 4, pages 153-194, World Scientific Publishing Co. Pte. Ltd..
    5. Philippe Aghion & Drew Fudenberg & Richard Holden & Takashi Kunimoto & Olivier Tercieux, 2012. "Subgame-Perfect Implementation Under Information Perturbations," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 127(4), pages 1843-1881.
    6. Li, Yunan, 2019. "Efficient mechanisms with information acquisition," Journal of Economic Theory, Elsevier, vol. 182(C), pages 279-328.
    7. Nicola Persico, 2000. "Information Acquisition in Auctions," Econometrica, Econometric Society, vol. 68(1), pages 135-148, January.
    8. Morris, Stephen & Ui, Takashi, 2005. "Generalized potentials and robust sets of equilibria," Journal of Economic Theory, Elsevier, vol. 124(1), pages 45-78, September.
    9. Eric Maskin, 1999. "Nash Equilibrium and Welfare Optimality," Review of Economic Studies, Oxford University Press, vol. 66(1), pages 23-38.
    10. Aubrey Clark & Giovanni Reggiani, 2021. "Contracts for acquiring information," Papers 2103.03911, arXiv.org.
    11. Kim-Sau Chung & Jeffrey C. Ely, 2003. "Implementation with Near-Complete Information," Econometrica, Econometric Society, vol. 71(3), pages 857-871, May.
    12. Daisuke Oyama & Satoru Takahashi, 2020. "Generalized Belief Operator and Robustness in Binary‐Action Supermodular Games," Econometrica, Econometric Society, vol. 88(2), pages 693-726, March.
    13. Carroll, Gabriel, 2019. "Robust incentives for information acquisition," Journal of Economic Theory, Elsevier, vol. 181(C), pages 382-420.
    14. Rubinstein, Ariel, 1989. "The Electronic Mail Game: Strategic Behavior under "Almost Common Knowledge."," American Economic Review, American Economic Association, vol. 79(3), pages 385-391, June.
    15. Elliot Lipnowski & Doron Ravid, 2020. "Cheap Talk With Transparent Motives," Econometrica, Econometric Society, vol. 88(4), pages 1631-1660, July.
    16. Sugaya, Takuo & Takahashi, Satoru, 2013. "Coordination failure in repeated games with private monitoring," Journal of Economic Theory, Elsevier, vol. 148(5), pages 1891-1928.
    17. Dirk Bergemann & Juuso Valimaki, 2002. "Information Acquisition and Efficient Mechanism Design," Econometrica, Econometric Society, vol. 70(3), pages 1007-1033, May.
    18. Abreu, Dilip & Matsushima, Hitoshi, 1992. "A Response [Virtual Implementation in Iteratively Undominated Strategies I: Complete Information]," Econometrica, Econometric Society, vol. 60(6), pages 1439-1442, November.
    19. Abreu, Dilip & Matsushima, Hitoshi, 1992. "Virtual Implementation in Iteratively Undominated Strategies: Complete Information," Econometrica, Econometric Society, vol. 60(5), pages 993-1008, September.
    20. Rochet, Jean-Charles, 1987. "A necessary and sufficient condition for rationalizability in a quasi-linear context," Journal of Mathematical Economics, Elsevier, vol. 16(2), pages 191-200, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jain, Ritesh & Lombardi, Michele, 2022. "Continuous virtual implementation: Complete information," Journal of Mathematical Economics, Elsevier, vol. 99(C).
    2. Dirk Bergemann & Stephen Morris, 2019. "Information Design: A Unified Perspective," Journal of Economic Literature, American Economic Association, vol. 57(1), pages 44-95, March.
    3. Takahashi, Satoru & Tercieux, Olivier, 2020. "Robust equilibrium outcomes in sequential games under almost common certainty of payoffs," Journal of Economic Theory, Elsevier, vol. 188(C).
    4. Kunimoto, Takashi, 2020. "Robust virtual implementation with almost complete information," Mathematical Social Sciences, Elsevier, vol. 108(C), pages 62-73.
    5. Chen, Yi-Chun & Mueller-Frank, Manuel & Pai, Mallesh M., 2022. "Continuous implementation with direct revelation mechanisms," Journal of Economic Theory, Elsevier, vol. 201(C).
    6. Takahashi, Satoru & Tercieux, Olivier, 2020. "Robust equilibrium outcomes in sequential games under almost common certainty of payoffs," Journal of Economic Theory, Elsevier, vol. 188(C).
    7. Takashi Ui & Stephen Morris, 2020. "Incomplete Information Robustness," Working Papers on Central Bank Communication 019, University of Tokyo, Graduate School of Economics.
    8. Kartik, Navin & Tercieux, Olivier & Holden, Richard, 2014. "Simple mechanisms and preferences for honesty," Games and Economic Behavior, Elsevier, vol. 83(C), pages 284-290.
    9. Chen, Yi-Chun & Kunimoto, Takashi & Sun, Yifei & Xiong, Siyang, 2022. "Maskin meets Abreu and Matsushima," Theoretical Economics, Econometric Society, vol. 17(4), November.
    10. Yi-Chun Chen & Richard Holden & Takashi Kunimoto & Yifei Sun & Tom Wilkening, 2023. "Getting Dynamic Implementation to Work," Journal of Political Economy, University of Chicago Press, vol. 131(2), pages 285-387.
    11. Ortner, Juan, 2015. "Direct implementation with minimally honest individuals," Games and Economic Behavior, Elsevier, vol. 90(C), pages 1-16.
    12. Atsushi Kajii & Stephen Morris, 2020. "Notes on “refinements and higher order beliefs”," The Japanese Economic Review, Springer, vol. 71(1), pages 35-41, January.
    13. Cabrales, Antonio & Serrano, Roberto, 2011. "Implementation in adaptive better-response dynamics: Towards a general theory of bounded rationality in mechanisms," Games and Economic Behavior, Elsevier, vol. 73(2), pages 360-374.
    14. Stephen Morris & Daisuke Oyama & Satoru Takahashi, 2023. "Strict robustness to incomplete information," The Japanese Economic Review, Springer, vol. 74(3), pages 357-376, July.
    15. Mariann Ollár & Antonio Penta, 2019. "Implementation via transfers with identical but unknown distributions," Economics Working Papers 1676, Department of Economics and Business, Universitat Pompeu Fabra.
    16. Mezzetti, Claudio & Renou, Ludovic, 2012. "Implementation in mixed Nash equilibrium," Journal of Economic Theory, Elsevier, vol. 147(6), pages 2357-2375.
    17. Xiong, Siyang, 2021. "Designing referenda: An economist's pessimistic perspective," Journal of Economic Theory, Elsevier, vol. 191(C).
    18. Oyama, Daisuke & Tercieux, Olivier, 2009. "Iterated potential and robustness of equilibria," Journal of Economic Theory, Elsevier, vol. 144(4), pages 1726-1769, July.
    19. Satoru Takahashi, 2020. "Non-equivalence between all and canonical elaborations," The Japanese Economic Review, Springer, vol. 71(1), pages 43-57, January.
    20. Nora, Vladyslav & Uno, Hiroshi, 2014. "Saddle functions and robust sets of equilibria," Journal of Economic Theory, Elsevier, vol. 150(C), pages 866-877.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:arx:papers:2112.06032. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: arXiv administrators (email available below). General contact details of provider: http://arxiv.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.