Informed-principal Problem in Mechanisms with Limited Commitment

Download or read book Informed-principal Problem in Mechanisms with Limited Commitment written by Suehyun Kwon and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper studies mechanism design with limited commitment where agents have persistent correlated types over the infinite horizon. The mechanism designer now faces the informed-principal problem in addition to usual issues with i.i.d. types. With an infinite horizon and nondurable good, there is always an equilibrium where all types of mechanism designer (private information on the type distribution of agents) pool together, and the ex-ante optimality depends on the cost of agents' gaming the system. The paper also shows sufficient conditions for ob-taining the full-commitment solution with limited commitment.