We show that in a class of I-agent mechanism design problems with evidence, commitment is unnecessary, randomization has no value, and robust incentive compatibility has no cost. In particular, for each agent i, we construct a simple disclosure game between the principal and agent i where the equilibrium strategies of the agents in these disclosure games give their equilibrium strategies in the game corresponding to the mechanism but where the principal is not committed to his response. In this equilibrium, the principal obtains the same payoff as in the optimal mechanism with commitment. As an application, we show that certain costly verification models can be characterized using equilibrium analysis of an associated model of evidence.
Bibliographical noteFunding Information:
Elchanan Ben-Porath: firstname.lastname@example.org Eddie Dekel: email@example.com Barton L. Lipman: firstname.lastname@example.org We thank numerous seminar audiences and four anonymous referees for useful comments and suggestions. We also thank the National Science Foundation, Grant SES-0820333 (Dekel), and the US–Israel Binational Science Foundation for support for this research. 1In a model with costly verification, the agents do not have evidence to present, but the principal can learn the true type of an agent at a cost.
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- Mechanism design