Affiliation:
1. Toulouse School of Economics, University of Toulouse (email: )
2. School of Economics, Shanghai University of Finance and Economics (email: )
Abstract
This paper considers an interdependent-value robust mechanism design problem, where the principal has little knowledge about the agent’s belief. Although ex post incentive-compatible (EPIC) mechanisms can implement allocations without any knowledge about the agent’s belief, we show that, under a certain condition (order-reversing interdependence), there exists a non-EPIC mechanism that achieves a strictly higher expected revenue than any EPIC mechanism given whatever (admissible) belief structure the agent may enjoy. Conversely, with sufficiently small interdependence, such a non-EPIC mechanism does not exist: for some (admissible) belief structure, an EPIC mechanism achieves the highest expected revenue. (JEL D82, D83)
Publisher
American Economic Association
Subject
General Economics, Econometrics and Finance
Cited by
1 articles.
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