Events

Prof Bart Lipman
Professor
Boston University

We consider optimal mechanisms for inducing agents to acquire costly evidence in a setting where a principal has a good to allocate that all agents want.  We show that optimal mechanisms are necessarily sequential in nature and have a threshold structure.  Agents with higher costs of obtaining evidence and/or worse distributions of value for the principal are asked for evidence later, if at all.  We derive these results in part by exploiting the relationship between the Lagrangian for this problem and the classic Weitzman (1979) “Pandora’s box” problem.