Journal of Political Economy Vol. 131 No. 3 2023
Informationally Simple Incentives
Abstract
We consider a mechanism design setting in which agents can acquire costly information on their preferences as well as others’. A mechanism is informationally simple if agents have no incentive to learn about others’ preferences. This property is of interest for two reasons. First, it is a necessary condition for the existence of dominant-strategy equilibria in the extended game. Second, this endogenizes an “independent-private-value” property of the interim information structure. We show that, generically, a mechanism is informationally simple if and only if it satisfies a separability condition that rules out most economically meaningful mechanisms.
- DOI
- 10.1086/722089
- Volume
- 131
- Issue
- 3
- Pages
- 802-837
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref