Mechanism Design by an Informed Principal: Pure-Strategy Equilibria for a Common Value Model

Rolf Tisljar

No 21/2002, Bonn Econ Discussion Papers from University of Bonn, Bonn Graduate School of Economics (BGSE)

Abstract: We present a common value mechanism design model for an informed principal where only the principal has private information, but her one-dimensional private information is allowed to be distributed according to any probability measure. For this model we characterize the set of pure-strategy perfect Bayesian equilibria. Furthermore, we present several equilibrium refinements based on the concept of equilibrium domination to take account of beliefs off the equilibrium path. Finally, we demonstrate that the extension of the strong solution of Myerson (Econometrica, 1983) to our model is supported as an equilibrium satisfying all refinement criteria presented (in case a strong solution exists).

Keywords: equilibrium refinement; infinite signaling game; informed principal; mechanism design; perfect Bayesian equilibrium; principle of inscrutability (search for similar items in EconPapers)
JEL-codes: C72 D82 (search for similar items in EconPapers)
Date: 2002
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bonedp:212002

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