The Revelation Principle in Multistage Games

Information Feedback in a Dynamic Tournament

Takuo Sugaya and Alexander Wolitzky

The Review of Economic Studies, 2021, vol. 88, issue 3, 1503-1540

Abstract: The communication revelation principle (RP) of mechanism design states that any outcome that can be implemented using any communication system can also be implemented by an incentive-compatible direct mechanism. In multistage games, we show that in general the communication RP fails for the solution concept of sequential equilibrium (SE). However, it holds in important classes of games, including single-agent games, games with pure adverse selection, games with pure moral hazard, and a class of social learning games. For general multistage games, we establish that an outcome is implementable in SE if and only if it is implementable in a canonical Nash equilibrium in which players never take codominated actions. We also prove that the communication RP holds for the more permissive solution concept of conditional probability perfect Bayesian equilibrium.

Keywords: Revelation principle; Mechanism design; Information design; Multistage games; Sequential equilibrium; Perfect Bayesian equilibrium; Codomination; C73; D82; D83 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:oup:restud:v:88:y:2021:i:3:p:1503-1540.

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