Ulric B. and Evelyn L. Bray Social Sciences Seminar
Baxter B125
Sequential Mechanisms for Evidence Acquisition
Eddie Dekel,
Professor of Economics,
Northwestern University,
Abstract: We consider optimal mechanisms for inducing agents to acquire costly evidence in a setting where a principal has a good to allocate that all agents want. We show that optimal mechanisms are necessarily sequential in nature and have a threshold structure. Agents with higher costs of obtaining evidence and/or worse distributions of value for the principal are asked for evidence later, if at all. We derive these results in part by exploiting the relationship between the Lagrangian for this problem and the classic Weitzman (1979) "Pandora's box" problem.
Written with Elchanan Ben-Porath and Barton L. Lipman.
For more information, please contact Letty Diaz by phone at 626-395-1255 or by email at letty.diaz@caltech.edu.