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First Best Implementation With Costly Information Acquisition

Author

Listed:
  • Daniil Larionov

  • Hien Pham

  • Takuro Yamashita

  • Shuguang Zhu

Abstract

We study mechanism design with flexible but costly information acquisition. There is a principal and four or more agents, sharing a common prior over the set of payoff-relevant states. The principal proposes a mechanism to the agents who can then acquire information about the state of the world by privately designing a signal device. As long as it is costless for each agent to acquire a signal that is independent from the state, we show that there exists a mechanism which allows the principal to implement any social choice rule at zero information acquisition cost to the agents.

Suggested Citation

  • Daniil Larionov & Hien Pham & Takuro Yamashita & Shuguang Zhu, 2022. "First Best Implementation With Costly Information Acquisition," CRC TR 224 Discussion Paper Series crctr224_2022_377, University of Bonn and University of Mannheim, Germany.
    • Handle: RePEc:bon:boncrc:crctr224_2022_377
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    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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