
TL;DR
This paper investigates the limits of information disclosure in strategic settings with multiple equilibria, proposing a worst-case optimal mechanism that improves upon full commitment by leveraging partial commitment and strategic message design.
Contribution
It introduces a worst-case implementation framework for cheap talk games, characterizes the optimal two-message mechanism, and highlights the strategic benefits of partial commitment in information elicitation.
Findings
Partial commitment improves the principal's worst-case payoff.
Optimal mechanism uses polarizing messages to influence uncommitted agents.
Results reveal a complementarity between automated and human decision-making.
Abstract
When multiple informative equilibria are possible in a general cheap talk game, how much information can a principal guarantee herself? To answer this question, I define the notion of worst-case implementation-implementation via the worst non-trivial equilibrium of a mechanism. Under this objective, standard full-commitment mechanisms fail, yielding the principal no more than her no-communication payoff. Partial commitment, however, can provide a strict improvement. The possibility of facing a strategic, uncommitted principal disciplines the agent's reporting incentives across all equilibria. I characterize the worst-case optimal mechanism and payoff under weak assumptions on the players' preferences. The optimal mechanism has a simple two-message structure. The agent's messages are polarizing, designed to maximize their strategic impact on the uncommitted principal's actions. If full…
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Taxonomy
TopicsGame Theory and Applications · Auction Theory and Applications · Game Theory and Voting Systems
