Hard Evidence and Mechanism Design
UCSD, Economics Working Paper No. 2002-16
17 Pages Posted: 14 Nov 2002
Date Written: September 2002
Abstract
We show how hard evidence can be incorporated into the mechanism-design framework. We provide a link between real evidence and abstract declarations, which clarifies when the abstract-declaration environment, which was first studied in Green and Laffont's (1986) "limited verifiability" analysis, has an intuitive interpretation. We find that the condition of evidentiary normality - under which, for each party, there is a one-to-one mapping between states and report/evidence pairs that holds across all implementation exercises - justifies studying the abstract-declaration model. However, without evidentiary normality, it is not appropriate to focus on static mechanisms.
JEL Classification: C70, D74, K10
Suggested Citation: Suggested Citation
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