Publication Type
Journal Article
Version
publishedVersion
Publication Date
11-2012
Abstract
We consider the robustness of extensive form mechanisms to deviations from common knowledge about the state of nature, which we refer to as information perturbations. First, we show that even under arbitrarily small information perturbations the Moore-Repullo mechanism does not yield (even approximately) truthful revelation and that in addition the mechanism has sequential equilibria with undesirable outcomes. More generally, we prove that any extensive form mechanism is fragile in the sense that if a non-Maskin monotonic social objective can be implemented with this mechanism, then there are arbitrarily small information perturbations under which an undesirable sequential equilibrium also exists. Finally, we argue that outside options can help improve efficiency in asymmetric information environments, and that these options can be thought of as reflecting ownership of an asset.
Keywords
Information, ownership, information perturbations
Discipline
Economic Theory
Research Areas
Economic Theory
Publication
Quarterly Journal of Economics
Volume
127
Issue
4
First Page
1843
Last Page
1881
ISSN
0033-5533
Identifier
10.1093/qje/qjs026
Publisher
Oxford University Press
Citation
KUNIMOTO, Takashi; FUDENBERG, Drew; KUNIMOTO, Takashi; and TERCIEUX, Oliver.
Subgame perfect implementation under information perturbations. (2012). Quarterly Journal of Economics. 127, (4), 1843-1881.
Available at: https://ink.library.smu.edu.sg/soe_research/1995
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1093/qje/qjs026