First Best Implementation with Costly Information Acquisition

Daniil Larionov, Hien Pham, Takuro Yamashita and Shuguang Zhu

No 21-1261, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: We study a mechanism design model with flexible but costly information acquisition. There is a principal and I ≥ 4 agents. The principal and the agents share a common prior over the set of payoff-relevant states of the world. The principal proposes a mechanism to the agents who can then acquire information about the state of the world by privately designing a signal device. As long as it is costless for each agent to acquire a signal that is pairwise independent from the state of the world, we show that there exists a mecha-nism which allows the principal to implement any social choice rule at zero information acquisition cost to the agents.

Date: 2021-11, Revised 2022-04
New Economics Papers: this item is included in nep-des and nep-mic
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Working Paper: First Best Implementation With Costly Information Acquisition (2022)
Working Paper: First best implementation with costly information acquisition (2022)
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