Making an Appraiser Work for You
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In many situations, an uninformed agent (UA) needs to elicit information from an informed agent (IA) who has unique expertise or knowledge related to some opportunity available to the UA. In many of those situations, the correctness of the information cannot be verified by the UA, and therefore it is important to guarantee that the information-elicitation mechanism incentivizes the IA to report truthfully. This paper presents and studies several information-elicitation mechanisms that guarantee truthful reporting, differing in the type of costs the IA incurs in producing and delivering the information. With no such costs, the expense for the UA in eliciting truthful information is positive but arbitrarily small. When information-delivery is costly, the extra expense for the UA (above the unavoidable cost of delivery) is arbitrarily small. Finally, when the information-production is costly, as long as the cost is sufficiently small, truthful information elicitation is possible and the extra expense for the UA (above the unavoidable cost of production) is arbitrarily small.
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