Adam Smith Business School

Professor Antonio Penta (Universitat Pompeu Fabra)

Incentive Compatibility and Belief Restrictions (joint with Mariann Ollár)
Friday, 14 November 2025, 16:00–17:30
Room 386AB, Adam Smith Business School

Abstract

We study a framework for robust mechanism design that can accommodate various degrees of robustness with respect to agents’ beliefs, which encompasses both the belief-free and Bayesian settings as special cases. For general belief restrictions, we characterize the set of incentive compatible direct mechanisms in general environments with interdependent values. Our main results, which we obtain based on a first-order approach, inform the design of transfers via ‘belief-based’ terms to attain incentive compatibility. In environments that satisfy a property of generalized independence, our results imply a robust version of revenue equivalence in non-Bayesian settings. Instead, under a notion of comovement between types and beliefs, which extends the idea of correlated information to non-Bayesian settings, we show that any allocation rule can be implemented, even if standard single-crossing and monotonicity conditions do not hold. Yet, unless the environment is Bayesian, information rents typically remain, and they decrease monotonically as the robustness requirements are weakened.

Biography

Antonio Penta is an economic theorist who joined ICREA in October 2018. He is also Professor of Economics at UPF Affiliated Professor at the Barcelona School of Economics. Prior to that, he was Assistant Professor (2010-2016) and then tenured Associate Professor (2016-2018) at the University of Wisconsin-Madison. He graduated in Economics from Bocconi Univ (2004), and then he obtained a M.A. (2008) and a PhD (2010) in economics from the University of Pennsylvania. He is currently Joint Managing Editor of the Review of Economic Studies, member of the Editorial Board of the American Economic Review and of the Review of Economic Studies, Associate Editor of Decisions in Economics and Finance. He previously as Associate Editor at the Journal of Economic Theory and Theoretical Economics. He has been awarded an ERC-Starting Grant in 2017, and an ERC-Consolidator Grant in 2022.

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First published: 5 November 2025