Mechanism design with partially - specified participation games Laurent Lamy

This paper considers the implementation of an economic outcome under complete information when the strategic and informational details of the participation game are partially-specified. This means that full participation is required to be a subgame-perfect equilibrium for a large variety of extensive modifications of the simultaneous-move participation game in the same vein as Kalai [Large Robust Games, Econometrica 72 (2004) 1631-1665], an implementation concept which is shown to be related to ‘strong Nash’ implementation in the corresponding simultaneous participation game. We solve the optimal design program: economic efficiency is not damaged but the principal may fail to extract fully agents’ surplus relative to the harsher threats and may have to use divide and conquer strategies that discriminate among symmetric agents. The analysis is extended to implementation under partial subgame-perfection criteria.