First best implementation with costly information acquisition

Daniil Larionov, Hien Pham, Takuro Yamashita, and Shuguang Zhu

We study mechanism design with flexible but costly information acquisition. There is a principal and four or more agents, sharing a common prior over the set of payoff-relevant states. The principal proposes a mechanism to the agents who can then acquire information about the state of the world by privately designing a signal device. As long as it is costless for each agent to acquire a signal that is independent from the state, we show that there exists a mechanism which allows the principal to implement any social choice rule at zero information acquisition cost to the agents.

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Year of publication:	[2022] ; This version: November 15, 2022
Authors:	Larionov, Daniil ; Pham, Hien ; Yamashita, Takuro ; Zhu, Shuguang
Publisher:	Mannheim, Germany : ZEW - Leibniz Centre for European Economic Research
Subject:	Informationsversorgung \| Information provision \| Informationskosten \| Information costs \| Mechanismus-Design-Theorie \| Mechanism design