Resource title

Communication complexity and mechanism design

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The curse of the Revelation Principle is that it leads us to focus on unrealistic mechanisms in which agents report all private information to the principal, who then makes all decisions centrally. This is not true when communication costs are introduced. Then, partial communication of information, sequential back-and-forth conversations, and decentralization of decisions become part of optimal mechanisms. This paper looks at the interplay between the incentive constraints and the communication constraints. When can they be separated, so that for example, one can separately study the incentive compatibility of a social choice rule and the minimum-cost communication protocol that realizes the social choice rule?

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en

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application/pdf

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http://flora.insead.edu/fichiersti_wp/inseadwp2007/2007-15.pdf

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Copyright INSEAD. All rights reserved