Dynamic Mechanism Collapse: A Boundary Characterization

Abstract

Public histories may change continuation rules but not ex-ante value. We study when public histories beyond posterior beliefs affect the seller's ex-ante value in dynamic mechanism design with a single-shot resource. We construct a belief-space payoff map from maximal sequential-equilibrium continuation values indexed by date and posterior belief. We show that the optimal ex-ante value of the dynamic problem is the finite concavification of the upper envelope of these continuation values. We give a belief-space criterion for when non-posterior public histories have no additional value, so that a terminal posterior-only mechanism attains the full-history value. Our results provide structural insights into when public histories matter for ex-ante value rather than merely for continuation play.

Working paper, 2026