Information Design in Allocation with Costly Verification: Multiple Agents

18 Pages Posted: 25 Oct 2024

See all articles by Yi-Chun Chen

Yi-Chun Chen

National University of Singapore (NUS) - Department of Economics

Gaoji Hu

Shanghai University of Finance and Economics - School of Economics

Xiangqian Yang

Hunan University - School of Economics and Trade

Date Written: September 18, 2024

Abstract

We study optimal information design on top of the allocation problem with costly verification à la Ben-Porath et al. (2014) and extend the analysis of Chen et al. (2024) to the multiple-agent case. Each agent learns a private signal about the allocation value to the principal from a signal distribution which is influenced by an information designer. The principal designs a mechanism to maximize her net value based upon the designed information. We identify (i) the agent-optimal information which maximizes the total probability of agents getting the object and (ii) the principal-optimal information. Unlike the single-agent case where any agent-optimal information is principal-worst, when there multiple agents, some agent-optimal information may not be principal-worst (though some remain to be). Moreover, we characterize when agent-optimal information design strictly increases the probability of allocation. Finally, through identifying the principal-worst information, we obtain an optimal robust allocation mechanism for the principal.

Keywords: information design, mechanism design, costly verification, robust mechanism design

Suggested Citation

Chen, Yi-Chun and Hu, Gaoji and Yang, Xiangqian, Information Design in Allocation with Costly Verification: Multiple Agents (September 18, 2024). Available at SSRN: https://ssrn.com/abstract=4960221 or http://dx.doi.org/10.2139/ssrn.4960221

Yi-Chun Chen

National University of Singapore (NUS) - Department of Economics ( email )

1 Arts Link AS2 #06-02
Singapore 117570, Singapore 119077
Singapore

Gaoji Hu (Contact Author)

Shanghai University of Finance and Economics - School of Economics ( email )

777 Guoding Road
Shanghai, 200433
China

Xiangqian Yang

Hunan University - School of Economics and Trade ( email )

China

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
10
Abstract Views
70
PlumX Metrics