Information Acquisition and Efficient Mechanism Design

Abstract

We consider a general mechanism design setting where each agent can acquire (covert) information before participating in the mechanism. The central question is whether a mechanism exists that provides the efficient incentives for information acquisition ex-ante and implements the efficient allocation conditional on the private information ex-post.It is shown that in every private value environment the Vickrey-Clark-Groves mechanism guarantees both ex-ante as well as ex-post efficiency. In contrast, with common values, ex-ante and ex-post efficiency cannot be reconciled in general. Sufficient conditions in terms of sub-and supermodularity are provided when (all) ex-post efficient mechanisms lead to private under-or over-acquisition of information. for several helpful discussions. We are especially grateful for suggestions from two anonymous referees and a co-editor. Comments from seminar participants at Minnesota, U.C.L.A., and Yale are greatly appreciated.

Optimal auctions with information acquisition

“…We assume that H 0 and H 1 satisfy the regularity assumption: 22 However, the rotation order assumption is not necessary for this result. 23 This is consistent with the results in Bergemann and Välimäki (2002): the individual incentives to acquire information coincide with the social optimum for efficient mechanisms in the private value setting.…”

On the uniqueness of Groves mechanisms and the payoff equivalence principle

“…7 Jehiel et al (2006) show that it is generically impossible to ex post implement nontrivial choice rules when valuations are interdependent and types are multi-dimensional. This impossibility result is overcome if types are one-dimensional -e.g., Jehiel and Moldovanu (2001), Bergemann and Välimäki (2002). Thus, the results presented here can be adapted to interdependent valuations with one-dimensional types.…”

Information acquisition in committees

“…While most of this literature deals with auction and public good models (see, e.g., Auriol and Gary-Bobo, 1999;Bergemann and Välimäki, 2002, and references therein), there are a few exceptions focusing on collective decision-making. Gersbach (1995) is one of the first papers to study the incentives of committee members to become informed.…”