Implementation with Evidence

Navin Kartik (1) , Olivier Tercieux (2, 3)

1 Columbia University [New York]
2 PSE - Paris-Jourdan Sciences Economiques
3 PSE - Paris School of Economics

We generalize the canonical problem of Nash implementation by allowing agents to voluntarily provide discriminatory signals, i.e., evidence. Evidence can either take the form of hard information or, more generally, have differential but nonprohibitive costs in different states. In such environments, social choice functions that are not Maskin-monotonic can be implemented. We formulate a more general property, evidence monotonicity, and show that this is a necessary condition for implementation. Evidence monotonicity is also sufficient for implementation in economic environments. In some settings, such as when agents have small preferences for honesty, any social choice function is evidence-monotonic. Additional characterizations are obtained for hard evidence. We discuss the relationship between the implementation problem where evidence provision is voluntary and a hypothetical problem where evidence can be chosen by the planner as part of an extended outcome space.

Keywords: Mechanism design; Costly signaling; Verifiable information; Nash implementation

Domains: Humanities and Social Sciences; Economics and Finance

Navin Kartik, Olivier Tercieux. Implementation with Evidence. Theoretical Economics, 2012, 72 (2), pp.323-355. ⟨10.3982/TE723⟩. ⟨halshs-00754592⟩