Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/217093
Authors: 
Silva, Francisco
Year of Publication: 
2019
Citation: 
[Journal:] Theoretical Economics [ISSN:] 1555-7561 [Volume:] 14 [Year:] 2019 [Issue:] 3 [Pages:] 971-1014
Abstract: 
I consider the interaction between an agent and a principal who is unable to commit not to renegotiate. The agent's type only affects the principal's utility. The principal has access to a public signal, correlated with the agent's type, which can be used to (imperfectly) verify the agent's report. I define renegotiation proof mechanisms and characterize the optimal one. The main finding of this paper is that the optimal renegotiation proof mechanism induces pooling at the top, i.e., types above a certain threshold report to be the largest type, while types below the threshold report truthfully.
Subjects: 
Renegotiation proof
mechanism design
verification
JEL: 
D8
Persistent Identifier of the first edition: 
Creative Commons License: 
https://creativecommons.org/licenses/by-nc/4.0/
Document Type: 
Article

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