First Best Implementation With Costly Information Acquisition

ABSTRACT We study mechanism design with flexible but costly information acquisition. There is one principal and four or more agents, who share a common prior belief over a set of payoff‐relevant states. The principal proposes a mechanism to the agents, each of whom can then acquire information about the state by privately designing a signal device. As long as it is costless for each agent to acquire a signal that is independent of the state, there exists a mechanism that allows the principal to implement any social choice rule at zero information acquisition cost for the agents.