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Renegotiation and Collusion-Proof Subgame Perfect Implementation (joint work with Kostas Koufopoulos)

Thursday 3 December 2020, 1.30PM to 2:30pm

Speaker(s): Giulio Trigilia (University of Rochester)

Abstract: This paper derives conditions under which the introduction of a third-party agent solves the renegotiation-proofness problem of Moore and Repullo (1988)-type mechanisms, without introducing the potential for other agents to collude with the third-party. The key novelties of our mechanism are:
(i) the introduction of a third-party agent only off-equilibrium and with some probability;
(ii) the fact that both its existence and its identity are unknown to the other agents.

We show that under these conditions a hidden third-party agent can restore the implementation of the efficient allocation, even if this agent does not observe the state of the world.

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