Information Design and Mechanism Design: An Integrated Framework

Dirk Bergemann, Tibor Heumann and Stephen Morris
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Dirk Bergemann: Yale University
Tibor Heumann: Instituto de Econom’a, Pontificia Universidad Cat—lica de Chile
Stephen Morris: Massachusetts Institute of Technology

No 2494, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: We develop an integrated framework for information design and mechanism design in screening environments with quasilinear utility. Using the tools of majorization theory and quantile functions, we show that both information design and mechanism design problems reduce to maximizing linear functionals subject to majorization constraints. For mechanism design, the designer chooses allocations weakly majorized by the exogenous inventory. For information design, the designer chooses information structures that are majorized by the prior distribution. When the designer can choose both the mechanism and the information structure simultaneously, then the joint optimization problem becomes bilinear with two majorization constraints. We show that pooling of values and associated allocations is always optimal in this case. Our approach unifies classic results in auction theory and screening, extends them to information design settings, and provides new insights into the welfare effects of jointly optimizing allocation and information.

Pages: 54 pages
Date: 2026-01-23
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