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Project selection with partially verifiable information

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  • Goel, Sumit
  • Hann-Caruthers, Wade

Abstract

We study a principal–agent project selection problem with asymmetric information. The principal must choose exactly one of N projects, each defined by the utility it provides to the principal and to the agent. The agent knows all the utilities, and the principal can commit to a mechanism (without transfers) that maps the agent’s report about the utilities to a chosen project. Unlike the typical literature, which assumes the agent can lie arbitrarily, we examine the principal’s problem under partial verifiability constraints. We characterize the class of truthful mechanisms under a family of partial verifiability constraints and study the principal’s problem for the specific cases of no-overselling and no-underselling. Our results suggest significant benefits for the principal from identifying or inducing such partial verifiability constraints, while also highlighting the simple mechanisms that perform well.

Suggested Citation

  • Goel, Sumit & Hann-Caruthers, Wade, 2024. "Project selection with partially verifiable information," Mathematical Social Sciences, Elsevier, vol. 132(C), pages 105-113.
    • Handle: RePEc:eee:matsoc:v:132:y:2024:i:c:p:105-113
    DOI: 10.1016/j.mathsocsci.2024.10.003
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