Self-rejecting mechanisms

• Type: Article in International Scientific Journal
• Date: 2020

Authors

João Correia-da-Silva (Author) FEP

Journal

Title: Games and Economic Behavior

Vol. 120

Pages: 434-457

ISSN: 0899-8256

Publisher: Elsevier

Indexing

ISI Web of Knowledge - 1 Citation

Scopus - 1 Citation

Other information

Authenticus ID: P-00R-RMA

DOI: 10.1016/j.geb.2020.01.006

Abstract (EN): In mechanism design problems where the outside option is a game, a version of the intuitive criterion restricts beliefs formed off-path in case of disagreement, and thus credible punishments for rejecting to participate. However, for virtual implementation, participation constraints can be relaxed by "designing" beliefs following disagreement using self-rejections: with a small probability that depends on the reported type profile, a mediator rejects the agreement in a way that is indistinguishable from rejection by an agent. Participation constraints can be further relaxed if the mediator makes private recommendations before the outside game is played. Any punishment (by all players except the rejector) such that each player-type is never asked to use an action he does not use in any Bayesian solution of the outside game is a credible punishment.

Language: English

Type (Professor's evaluation): Scientific

No. of pages: 24