Mechanism Design in Hidden Action and Hidden Information: Richness and Pure Groves

Hitoshi Matsushima and Shunya Noda

No CARF-F-386, CARF F-Series from Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo

Abstract: We investigate general collective decision problems related to hidden action and hidden information. We assume that each agent has a wide availability of action choices at an early stage, which provides significant externality effects on the other agent’s valuations in all directions. We characterize the class of all mechanisms that solve the hidden action problem, and demonstrate equivalence properties in the ex-post term. Importantly, we find that pure Groves mechanisms, defined as the simplest form of canonical Groves mechanisms, are the only efficient mechanisms that solve such hidden action problems. We argue that the resolution of the hidden action problem automatically resolves the hidden information problem.

Pages: 45 pages
Date: 2016-05
New Economics Papers: this item is included in nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://www.carf.e.u-tokyo.ac.jp/old/pdf/workingpaper/fseries/F386.pdf (application/pdf)

Related works:
Working Paper: Mechanism Design in Hidden Action and Hidden Information: Richness and Pure Groves (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cfi:fseres:cf386

Access Statistics for this paper

More papers in CARF F-Series from Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo Contact information at EDIRC.
Bibliographic data for series maintained by ().