On the Foundations of Ex Post Incentive-Compatible Mechanisms

Takuro Yamashita and Shuguang Zhu

American Economic Journal: Microeconomics, 2022, vol. 14, issue 4, 494-514

Abstract: This paper considers an interdependent-value robust mechanism design problem, where the principal has little knowledge about the agent's belief. Although ex post incentive-compatible (EPIC) mechanisms can implement allocations without any knowledge about the agent's belief, we show that, under a certain condition (order-reversing interdependence), there exists a non-EPIC mechanism that achieves a strictly higher expected revenue than any EPIC mechanism given whatever (admissible) belief structure the agent may enjoy. Conversely, with sufficiently small interdependence, such a non-EPIC mechanism does not exist: for some (admissible) belief structure, an EPIC mechanism achieves the highest expected revenue.

JEL-codes: D82 D83 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (3)

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Related works:
Working Paper: On the foundations of ex post incentive compatible mechanisms (2022)
Working Paper: On the Foundations of Ex Post Incentive Compatible Mechanisms (2021)
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DOI: 10.1257/mic.20200174

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