Renegotiation-Proof Mechanism Design

Zvika Neeman and Gregory Pavlov ()

No 275726, Foerder Institute for Economic Research Working Papers from Tel-Aviv University > Foerder Institute for Economic Research

Abstract: A mechanism is said to be renegotiation-proof if it is robust against renegotation both before and after it is played. We ask the following three related questions: (1) what kind of environments or mechanism design problems admit renegotiation-proof implementation? (2) what kind of social choice rules are implementable in a way that is renegotiation-proof? and (3) what kind of mechanisms are renegotiation-proof? We provide characterization results for environments, social choice rules, and mechanisms that facilitate renegotiation-proof implementation in complete information settings, and in incomplete information settings with independent private values. For incomplete information settings with correlated interdependent values we provide sufficient conditions for renegotiation-proof implementation. Importantly, our results imply that some common mechanism design problems do not admit the existence of any renegotiation-proof mechanism.

Keywords: Financial; Economics (search for similar items in EconPapers)
Pages: 45
Date: 2009-09
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Working Paper: Renegotiation-Proof Mechanism Design (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:isfiwp:275726

DOI: 10.22004/ag.econ.275726

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