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Bayesian implementation with verifiable information

Esteban Peralta

Games and Economic Behavior, 2019, vol. 116, issue C, 65-72

Abstract: This note studies the class of allocations that are fully Bayesian implementable in the presence of verifiable information. I identify a condition, termed evidence distinguishability, that together with incentive compatibility is both necessary and sufficient for full Bayesian implementation in direct mechanisms that elicit verifiable information. I show, however, that every evidence distinguishable allocation that is incentive compatible when verifiable information is not elicited is Bayesian monotonic at every verifiable deception; namely, at every verifiable joint report of information at which the direct mechanism delivers an undesirable outcome. To the extent that requiring Bayesian monotonicity to hold at every verifiable deception is a demanding condition, only indirect mechanisms can exploit the presence of verifiable information to fully implement incentive compatible allocations.

Keywords: Mechanism design; Bayesian implementation; Verifiable information (search for similar items in EconPapers)
JEL-codes: C72 D71 D82 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1016/j.geb.2019.04.003

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