Hard Evidence and Mechanism Design
In its standard “public choice” form, the mechanism-design framework abstracts from institutional and technological constraints beyond those that the modeler can represent in the definition of states, outcomes, and preferences. This abstraction can create a useful simplification. However, there are real constraints that we are interested in studying but that cannot be incorporated into the standard framework. For example, in many settings, parties can present hard evidence. The key features of hard evidence are that (a) whether to present evidence is an inalienable decision, and (b) the existence of evidence depends on the state. We show how hard evidence can be incorporated into the mechanism-design framework. This is particularly interesting in two player settings, which much of the recent contract theory literature has focused on, because, in general, more outcome functions can be implemented than can be with standard Nash implementation. A key objective is to address the meaning and validity of the revelation principle in the context of hard evidence. We address the degree to which the parties' behavior in a mechanism can be interpreted as abstract “declarations of the state.” We provide a link between real evidence and abstract declarations, which clarifies when the abstract-declaration environment, which was first studied in Green and Laffont's (1986) “limited verifiability” analysis, has an intuitive interpretation. We find that the condition of evidentiary normality---under which, for each party, there is a one-to-one mapping between states and report/evidence pairs that holds across all implementation exercises---justifies studying the abstract-declaration model. However, without evidentiary normality, it is not appropriate to focus on static mechanisms. We show that, regardless of whether evidentiary normality holds, any implementable outcome function can be implemented with a two-stage dynamic mechanism, in which players simultaneously send messages and then simultaneously disclose hard evidence
|Date of creation:||11 Aug 2004|
|Contact details of provider:|| Phone: 1 212 998 3820|
Fax: 1 212 995 4487
Web page: http://www.econometricsociety.org/pastmeetings.asp
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Masahiro Okuno-Fujiwara & Andrew Postlewaite & Kotaro Suzumura, 1990. "Strategic Information Revelation," Review of Economic Studies, Oxford University Press, vol. 57(1), pages 25-47.
- Hart, Oliver D & Moore, John, 1988.
"Incomplete Contracts and Renegotiation,"
Econometric Society, vol. 56(4), pages 755-785, July.
- Hardman Moore, John & Hart, Oliver, 1985. "Incomplete Contracts and Renegotiation," CEPR Discussion Papers 60, C.E.P.R. Discussion Papers.
- Oliver Hart & John Moore, 1985. "Incomplete Contracts and Renegotiation," Working papers 367, Massachusetts Institute of Technology (MIT), Department of Economics.
- Deneckere,R. & Severinov,S., 2001. "Mechanism design and communication costs," Working papers 23, Wisconsin Madison - Social Systems.
- Jerry R. Green & Jean-Jacques Laffont, 1986. "Partially Verifiable Information and Mechanism Design," Review of Economic Studies, Oxford University Press, vol. 53(3), pages 447-456.
- Eric Maskin & John Moore, 1999.
"Implementation and Renegotiation,"
Review of Economic Studies,
Oxford University Press, vol. 66(1), pages 39-56.
- Maskin, Eric & Moore, John, 1998. "Implementation and renegotiation," LSE Research Online Documents on Economics 19350, London School of Economics and Political Science, LSE Library.
- Eric Maskin & John Moore, 1999. "Implementation and Renegotiation," Harvard Institute of Economic Research Working Papers 1863, Harvard - Institute of Economic Research.
- Daniel J. Seidmann & Eyal Winter, 1997. "Strategic Information Transmission with Verifiable Messages," Econometrica, Econometric Society, vol. 65(1), pages 163-170, January.
- Sandro Brusco, 2002.
"Unique Implementation of Action Profiles: Necessary and Sufficient Conditions,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(2), pages 509-532, May.
- Brusco, Sandro, 1997. "Unique implementation of action profiles: necessary and sufficient conditions," DEE - Working Papers. Business Economics. WB 7024, Universidad Carlos III de Madrid. Departamento de Economía de la Empresa.
- Lipman Barton L. & Seppi Duane J., 1995. "Robust Inference in Communication Games with Partial Provability," Journal of Economic Theory, Elsevier, vol. 66(2), pages 370-405, August.
- Bull, Jesse & Watson, Joel, 2004.
"Evidence disclosure and verifiability,"
Journal of Economic Theory,
Elsevier, vol. 118(1), pages 1-31, September.
- Bull, Jesse & Watson, Joel, 2000. "Evidence Disclosure and Verifiability," University of California at San Diego, Economics Working Paper Series qt6th0060j, Department of Economics, UC San Diego.
- Bull, Jesse & Watson, Joel, 2002. "Evidence Disclosure and Verfiability," University of California at San Diego, Economics Working Paper Series qt19p7z2gm, Department of Economics, UC San Diego.
- Paul Milgrom & John Roberts, 1986. "Relying on the Information of Interested Parties," RAND Journal of Economics, The RAND Corporation, vol. 17(1), pages 18-32, Spring.
- Dilip Mookherjee & Stefan Reichelstein, 1990. "Implementation via Augmented Revelation Mechanisms," Review of Economic Studies, Oxford University Press, vol. 57(3), pages 453-475.
- Robert Evans, 2008. "Simple Efficient Contracts in Complex Environments," Econometrica, Econometric Society, vol. 76(3), pages 459-491, May.
- Evans, R., 2006. "Simple Efficient Contracts in Complex Environments," Cambridge Working Papers in Economics 0627, Faculty of Economics, University of Cambridge.
- Partha Dasgupta & Peter Hammond & Eric Maskin, 1979. "The Implementation of Social Choice Rules: Some General Results on Incentive Compatibility," Review of Economic Studies, Oxford University Press, vol. 46(2), pages 185-216.
- Forges, Francoise & Koessler, Frederic, 2005. "Communication equilibria with partially verifiable types," Journal of Mathematical Economics, Elsevier, vol. 41(7), pages 793-811, November.
- F. Forges & Frederic Koessler, 2003. "Communication Equilibria with Partially Verifiable Types," THEMA Working Papers 2003-10, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
- Bull Jesse, 2008. "Costly Evidence Production and the Limits of Verifiability," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 8(1), pages 1-28, July.
- Jacob Glazer & Ariel Rubinstein, 2004. "On Optimal Rules of Persuasion," Econometrica, Econometric Society, vol. 72(6), pages 1715-1736, November.
- Myerson, Roger B., 1982. "Optimal coordination mechanisms in generalized principal-agent problems," Journal of Mathematical Economics, Elsevier, vol. 10(1), pages 67-81, June.
- Jesse Bull, 2009. "Costly Evidence And Systems Of Fact-Finding," Bulletin of Economic Research, Wiley Blackwell, vol. 61(2), pages 103-125, April. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:ecm:nawm04:433. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christopher F. Baum)
If references are entirely missing, you can add them using this form.