Information Design of Dynamic Mechanisms

TL;DR

This paper characterizes when dynamic mechanisms are behaviorally equivalent based on their information flow, introducing the concept of immediacy and minimality to refine the revelation principle in dynamic implementation.

Contribution

It provides a formal characterization of behavioral equivalence via informational equivalence and introduces immediacy as a key property of gradual mechanisms.

Findings

Behavioral equivalence is characterized by informational equivalence.

Immediacy of mechanisms is linked to their minimal game structure.

Immediate gradual mechanisms refine the revelation principle.

Abstract

Two dynamic game forms are said to be behaviorally equivalent if they share the "same" profiles of structurally reduced strategies (Battigalli et al., 2020). In the context of dynamic implementation, behaviorally equivalent game forms are interchangeable under a wide range of solution concepts for the purpose of implementing a social choice function. A gradual mechanism (Chew and Wang, 2022), which designs a procedure of information transmission mediated by a central administrator, enables a formal definition of information flow. We provide a characterization of behavioral equivalence between gradual mechanisms in terms of their informational equivalence -- each agent is designed the "same" information flow. Information flow also helps in defining an intuitive notion of immediacy for gradual mechanisms which is equivalent to their game structures being minimal. Given that the class of gradual mechanisms serves as a revelation principle for dynamic implementation (Li, 2017; Akbarpour and Li, 2020; Mackenzie, 2020; Chew and Wang, 2022), the class of immediate gradual mechanisms provides a refined revelation principle.