The Role of the Common Prior in Robust Implementation

Dirk Bergemann and Stephen Morris

Chapter 6 in Robust Mechanism Design:The Role of Private Information and Higher Order Beliefs, 2012, pp 241-251 from World Scientific Publishing Co. Pte. Ltd.

Abstract: AbstractWe consider the role of the common prior for robust implementation in an environment with interdependent values. Specifically, we investigate a model of public good provision which allows for negative and positive informational externalities. In the corresponding direct mechanism, the agents’ reporting strategies are strategic complements with negative informational externalities and strategic substitutes with positive informational externalities. We derive the necessary and sufficient conditions for robust implementation in common prior type spaces and contrast this with our earlier results without the common prior. In the case of strategic complements the necessary and sufficient conditions for robust implementation do not depend on the existence of a common prior. In contrast, with strategic substitutes, the implementation conditions are much weaker under the common prior assumption.

Keywords: Mechanism Design; Game Theory; Auction Theory; Implementation; Private Information; First and Higher-Order Belief; BayesNash Equilibrium; Ex Post Equilibrium; Rationalizability; Vickrey-Clarke-Groves Mechanisms; Private Value; Interdependent Value; Common Value; Belief-Free Mechanisms (search for similar items in EconPapers)
JEL-codes: C70 D0 (search for similar items in EconPapers)
Date: 2012
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Related works:
Journal Article: The Role of the Common Prior in Robust Implementation (2008)
Working Paper: The Role of the Common Prior in Robust Implementation (2007)
Working Paper: The Role of the Common Prior in Robust Implementation (2007)
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