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Direct Implementation with Evidence

Soumen Banerjee, Yi-Chun Chen and Yifei Sun

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Abstract: We study full implementation with evidence in an environment with bounded utilities. We show that a social choice function is Nash implementable in a direct revelation mechanism if and only if it satisfies the measurability condition proposed by Ben-Porath and Lipman (2012). Building on a novel classification of lies according to their refutability with evidence, the mechanism requires only two agents, accounts for mixed-strategy equilibria and accommodates evidentiary costs. While monetary transfers are used, they are off the equilibrium and can be balanced with three or more agents. In a richer model of evidence due to Kartik and Tercieux (2012a), we also establish pure-strategy implementation with two or more agents in a direct revelation mechanism. We also obtain a necessary and sufficient condition on the evidence structure for renegotiation-proof bilateral contracts, based on the classification of lies.

Date: 2021-05, Revised 2021-09
New Economics Papers: this item is included in nep-cta, nep-des and nep-gth
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