Equilibrium Selection via Endogenous Information Structures: Theory and Experiment

Yan (2024) shows that providing agents with additional information about others' types can eliminate undesirable equilibria. But what if agents can endogenously influence how much information they (or others) receive, possibly at a cost? This idea studies endogenous information acquisition in mechanism design—where agents’ choices about their own or others’ signals shape the resulting equilibrium. It builds on the literature’s focus on exogenous signal structures (Yan 2024; Griesbach et al. 2023) but layers in a new dimension of strategic behavior. Theoretical models could be complemented by lab experiments (as in behavioral economics), testing when endogenous information acquisition leads to efficient, unique, or unexpected equilibria. This could offer new tools for mechanism designers to “nudge” selection toward desirable outcomes, especially in settings plagued by equilibrium multiplicity (Velicheti et al. 2023).

References:

1. Information About Other Players in Mechanism Design. Eric Yan (2024).
2. Information Design for Congestion Games with Unknown Demand. Svenja M. Griesbach, Martin Hoefer, Max Klimm, Tim Koglin (2023). AAAI Conference on Artificial Intelligence.
3. Strategic Information Design in Quadratic Multidimensional Persuasion Games with Two Senders. R. K. Velicheti, Melih Bastopcu, T. Başar (2023). American Control Conference.