IDEAS home Printed from https://ideas.repec.org/a/the/publsh/6266.html
   My bibliography  Save this article

Probabilistic verification in mechanism design

Author

Listed:
  • Ball, Ian

    (Department of Economics, MIT)

  • Kattwinkel, Deniz

    (Department of Economics, UCL)

Abstract

We introduce a model of probabilistic verification in mechanism design. The principal elicits a message from the agent and then selects a test to give the agent. The agent's true type determines the probability with which he can pass each test. We characterize whether each type has an associated test that best screens out all other types. If this condition holds, then the testing technology can be represented in a tractable reduced form. We use this reduced form to solve for profit-maximizing mechanisms with verification. As the verification technology varies, the solution continuously interpolates between the no-verification solution and full surplus extraction.

Suggested Citation

  • Ball, Ian & Kattwinkel, Deniz, 0. "Probabilistic verification in mechanism design," Theoretical Economics, Econometric Society.
    • Handle: RePEc:the:publsh:6266
    as

    Download full text from publisher

    File URL: http://econtheory.org/ojs/index.php/te/article/viewForthcomingFile/6266/41180/1
    File Function: Working paper version. Paper will be copyedited and typeset before publication.
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    Probabilistic verification; ordering tests; evidence;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:the:publsh:6266. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Martin J. Osborne (email available below). General contact details of provider: http://econtheory.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.