CeDEx Seminar - Elchanan Ben-Porath (Hebrew University)

Mechanism Design with Evidence: Commitment and Robustness

Abstract:

We show that in a class of mechanism design problems with evidence, randomization has no value for the principal, robust incentive compatibility has no cost, and the optimal outcome can be implemented even when the principal cannot commit. In particular, for each agent i we construct a simple disclosure game between the principal and agent i where the equilibrium strategies of the agents in these disclosure games are their equilibrium strategies in the mechanism without commitment. In this equilibrium the principal obtains the same payoff as in the optimal mechanism with commitment.