European Business Schools Librarian's Group

HEC Research Papers Series,
HEC Paris

No 1151: A Tight Sufficient Condition for Recursive Formulation of Dynamic Implementation Problems

Eric Mengus () and George Lukyanov ()

Abstract: This note explores conditions that admit recursive representation for a class of dynamic mechanism design problems. We derive a tight sufficient condition, called the common state property (CSP), which ensures that temporary incentive constraints guarantee implementability, and so allows to characterize the principal's problem recursively. The condition imposes no restrictions on agent's preferences and only concerns the properties of the evolution of private information.

Keywords: First order approach; Dynamic mechanism design

JEL-codes: D30; D80; D82

21 pages, June 9, 2016

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