The Role of the Common Prior in Robust Implementation

13 Pages Posted: 17 Sep 2007

See all articles by Dirk Bergemann

Dirk Bergemann

Yale University - Cowles Foundation - Department of Economics; Yale University - Cowles Foundation

Stephen Morris

Princeton University - Department of Economics

Date Written: September 2007

Abstract

We consider the role of the common prior for robust implementation in an environment with interdependent values. Specifically, we investigate a model of public good provision which allows for negative and positive informational externalities. In the corresponding direct mechanism, the agents' reporting strategies are strategic complements with negative informational externalities and strategic substitutes with positive informational externalities.

We derive the necessary and sufficient conditions for robust implementation in common prior type spaces and contrast this with our earlier results without the common prior. In the case of strategic complements the necessary and sufficient conditions for robust implementation do not depend on the existence of a common prior. In contrast, with strategic substitutes, the implementation conditions are much weaker under the common prior assumption.

Keywords: Common prior, Correlated equilibrium, Ex post equilibrium, Mechanism design, Robust implementation, Rationalizability, Strategic complements, Strategic substitutes, Uniqueness

JEL Classification: C79, D82

Suggested Citation

Bergemann, Dirk and Morris, Stephen Edward, The Role of the Common Prior in Robust Implementation (September 2007). Cowles Foundation Discussion Paper No. 1628. Available at SSRN: https://ssrn.com/abstract=1015108

Dirk Bergemann (Contact Author)

Yale University - Cowles Foundation - Department of Economics ( email )

28 Hillhouse Ave
New Haven, CT 06520-8268
United States
203-432-3592 (Phone)
203-432-2128 (Fax)

HOME PAGE: http://www.econ.yale.edu/~dirk/

Yale University - Cowles Foundation

Box 208281
New Haven, CT 06520-8281
United States

Stephen Edward Morris

Princeton University - Department of Economics ( email )

Princeton, NJ 08544-1021
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
85
Abstract Views
719
rank
289,287
PlumX Metrics