Theoretical Economics, Volume 19, Number 2 ( 2024)

Theoretical Economics 19 (2024), 783–822

Direct implementation with evidence

Soumen Banerjee, Yi-Chun Chen, Yifei Sun


We study full implementation with evidence in an environment with bounded utilities. We show that a social choice function is Nash implementable in a direct revelation mechanism if and only if it satisfies the measurability condition proposed by Ben-Porath and Lipman (2012). Building on a novel classification of lies according to their refutability with evidence, the mechanism requires only two agents, accounts for mixed-strategy equilibria and accommodates evidentiary costs. While monetary transfers are used, they are off the equilibrium and can be balanced with three or more agents. In a richer model of evidence due to Kartik and Tercieux (2012a), we establish pure-strategy implementation with two or more agents in a direct revelation mechanism. We also obtain a necessary and sufficient condition on the evidence structure for renegotiation-proof bilateral contracts, based on the classification of lies.

Keywords: Mechanism design, costly signaling, verifiable information, Nash implementation

JEL classification: C72, D02, D71

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