First Best Implementation with Costly Information Acquisition

Résumé

We study a mechanism design model with flexible but costly information acquisition. There is a principal and I ≥ 4 agents. The principal and the agents share a common prior over the set of payoff-relevant states of the world. The principal proposes a mechanism to the agents who can then acquire information about the state of the world by privately designing a signal device. As long as it is costless for each agent to acquire a signal that is pairwise independent from the state of the world, we show that there exists a mecha-nism which allows the principal to implement any social choice rule at zero information acquisition cost to the agents.