Implementation via Information Design in Binary-Action Supermodular Games. Joint w/ Daisuke Oyama and Satoru Takahashi. 

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Abstract:  What outcomes can be implemented by the choice of an information structure in binary action supermodular games? It is known that an outcome can be partially implemented (induced by some equilibrium) if it satisfies obedience (Bergemann and Morris (2016)). We characterize when an outcome can be smallest equilibrium implemented (induced by the smallest equilibrium) and fully implemented (induced by all equilibria). Smallest equilibrium implementation requires a stronger sequential obedience condition: there is a stochastic ordering of players under which players are prepared to switch to the high action even if they think only those before them will switch. Full implementation requires sequential obedience in both directions.

As one application of our result, we show that if the game has a convex potential and an information designer wants players to choose the high action, it is optimal choose a perfect coordination outcome, where either all players choose the high action or all player choose the low action. The optimal outcome has all playing the highest action on the largest event where that action profile maximizes the ex ante potential.

Bio: Stephen Morris is currently the Peter A. Diamond Professor of Economics.  He received his Ph.D. from Yale University in 1991 and previously taught at the University of Pennsylvania, Yale University and Princeton University. His research focuses on foundations and applications of game theory and mechanism design, and in particular the role of incomplete information.  Applications include finance, auctions, macroeconomics and political economy.  He is a former Sloan Research Fellow, a Fellow of the Econometric Society, and an elected member of the American Academy of Arts and Sciences.  He served as editor of Econometrica from 2007-2011 and was President of the Econometric Society in 2019.