The Interplay Between Incentives and Communication Complexity in Mechanism Design
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. Then 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 e.g. one can separately study the incentive compatibility of a social choice rule and the minimum-cost communication protocol that realizes the social choice rule?
|Date of creation:||2008|
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- Dilip Mookherjee, 2006.
"Decentralization, Hierarchies, and Incentives: A Mechanism Design Perspective,"
Journal of Economic Literature,
American Economic Association, vol. 44(2), pages 367-390, June.
- Dilip Mookherjee, 2005. "Decentralization, Hierarchies and Incentives: A Mechanism Design Perspective," Boston University - Department of Economics - Working Papers Series WP2005-034, Boston University - Department of Economics, revised Sep 2005.
- Michel Poitevin, 2000. "Can the theory of incentives explain decentralization?," Canadian Journal of Economics, Canadian Economics Association, vol. 33(4), pages 878-906, November.
- Poitevin, M., 2000. "Can the Theory of Incentives Explain Devcentralization?," Cahiers de recherche 2000-13, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
- Michel Poitevin, 2000. "Can the Theory of Incentives Explain Decentralization?," CIRANO Working Papers 2000s-32, CIRANO.
- Melumad, Nahum & Mookherjee, Dilip & Reichelstein, Stefan, 1992. "A theory of responsibility centers," Journal of Accounting and Economics, Elsevier, vol. 15(4), pages 445-484, December.
- POITEVIN, Michel, 2000. "Innis Lecture: Can the Theory of Incentives Explain Decentralization?," Cahiers de recherche 2000-13, Universite de Montreal, Departement de sciences economiques. Full references (including those not matched with items on IDEAS)
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