Strong implementation with partially honest individuals

In this paper we provide sufficient conditions for a social choice rule to be implementable in strong Nash equilibrium in the presence of partially honest agents, that is, agents who break ties in favor of a truthful message when they face indifference between outcomes. In this way, we achieve a relaxation in the condition of Korpela (2013), namely the Axiom of Sufficient Reason. Our new condition, Weak Pareto Dominance, is shown to be sufficient along with Weak Pareto Optimality and Universally Worst Alternative. We finally provide applications of our result in pure matching and bargaining environments

Pre-Decision Side-Bet Sequences

Risk-averse Expected Utility (EU) decision makers with wealth-dependent utility functions may find themselves indifferent between accepting and rejecting an indivisible risky prospect. Bell (1988) showed that under these circumstances it may be EU-enhancing for the decision maker to engage in an actuarially fair pre-decision side bet, accepting the indivisible risky prospect conditional upon winning the side bet. In this letter we show that decision makers restricted to actuarially unfair side bets may optimally engage in a sequence of individually EU-enhancing side bets. This contrasts with the case of actuarially fair side bets where only one such bet will be undertaken. The actuarially unfair side bet's optimal stake size can be a significant proportion of the individual's initial wealth. Nevertheless after losing the side bet wealth may still remain within the interval of interim (utility) convexity, whereupon it is optimal to place another side bet

Implementation with a sympathizer

This paper considers the Nash implementation problem in which the planner does not know individuals' state-contingent choices that may involve violations of rationality. In economic environments with at least three individuals, we show that the planner may Nash implement a social choice correspondence while extracting information about individuals' state-contingent choices from the society whenever one of the individuals, whose identity is not necessarily known to the planner and the other individuals, is a weak sympathizer. Such an agent is weakly inclined toward the truthful revelation of individuals' state-contingent choices but not the \true" state. Then, in every Nash equilibrium of the mechanism we design, all individuals except one truthfully reveal the same information about individuals' choices

Essays on institutions and implementation

This thesis studies three issues in the field of implementation theory. In the first chapter, I examine the implementation of social choice rules under strong Nash equilibrium, when agents do not only care about the final outcomes, but also have a small intrinsic preference for honesty. Specifically, an agent is partially honest if she breaks ties in favour of a truthful strategy, when she faces indifference between outcomes. I present sufficient conditions for implementation in such cases and provide applications in matching and bargaining environments. In the second chapter, I study the issue of decentralization from the implementation perspective. In most cases of institution design, a social planner is forced to operate in a decentralized manner, by designing distinct institutions that deal with different issues or sectors, over which agents may have complementarities in their preferences. By utilizing the notion of a rights structure, I consider a two-sector environment and examine the possibilities that arise in implementation when the social planner can condition the rights structure of one sector to the one of the other. We distinguish two cases, one when a sector constitutes an institutional constraint (constrained conditional implementation), and one where both sectors can be objects of design (conditional implementation). I characterize the social choice rules that are implementable in the first case, while in the second case I provide sufficient conditions for implementation. My results outline the difficulties of implementation in decentralized environments. As applications, I include some possibility results. First I prove the implementability of a weaker version of the stable rule in a constrained matching environment with partners and projects and second, I prove the implementability of the weak Pareto rule in a multi-issue environment with lexicographic preferences. In the third chapter, I extend the positive results obtained in Dutta and Sen (2012) to the framework of rights structures. I show that the well-known unanimity condition is suffcient for implementation in such an environment when there is at least one partially honest agent