Mechanism Design and Non-Cooperative Renegotiation

Résumé

We characterize decision rules which are implementable in mechanism design settings when, after the play of a mechanism, the uninformed party can propose a new mechanism to the informed party. The necessary and sufficient conditions are, essentially, that the rule would be implementable if parties could commit not to renegotiate the mechanism, that for each type the decision is at least as high as if there were no mechanism, and that the slope of the decision function is not too high. The direct mechanism which implements such a rule when renegotiation can be prevented will also implement it in any equilibrium when it cannot, so the standard mechanism is robust to renegotiation.