Mechanism design with informational punishment Articles uri icon

publication date

  • July 2023

start page

  • 197

end page

  • 209


  • 140

International Standard Serial Number (ISSN)

  • 0899-8256

Electronic International Standard Serial Number (EISSN)

  • 1090-2473


  • We introduce informational punishment to the design of mechanisms that compete with an exogenous status quo mechanism: Players can send garbled public messages with some delay and others cannot commit to ignoring them. Optimal informational punishment ensures that full participation is without loss, even if any single player can publicly enforce the status quo mechanism. Informational punishment permits using a standard revelation principle, is independent of the mechanism designer's objective, and operates exclusively off the equilibrium path. It is robust to refinements and applies in informed-principal settings. We provide conditions that make it robust to opportunistic signal designers.


  • Economics


  • default games; endogenous outside options; full participation; informational opportunism; mechanism design; signaling