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,"
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- 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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