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Mechanism Design with Information Acquisition: Efficiency and Full Surplus Extraction

  • Author(s): Bikhchandani, S.
  • Obara, I.
  • et al.
Abstract

Consider a mechanism design setting in which agents acquire costly information about an unknown, payoff-relevant state of nature. Information gathering is covert and the agents' information is correlated. We investigate conditions under which (i) efficiency and (ii) full surplus extraction are Bayesian incentive compatible and interim individually rational.

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