Natural implementation with semi-responsible agents in pure exchange economies

We study Nash implementation by natural price-quantity mechanisms in pure exchange economies when agents have intrinsic preferences for responsibility. An agent has an intrinsic preference for responsibility if she cares about truth-telling that is in line with the goal of the mechanism designer besides her material well-being. A semi-responsible agent is an agent who, given what her opponents do, acts in an irresponsible manner when a responsible behavior poses obstacles to her material well-being. The class of efficient allocation rules that are Nash implementable is identified provided that there is at least one agent who is semi-responsible. The Walrasian rule is shown to belong to that class

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

Partially-honest Nash implementation: a full characterization

A partially-honest individual is a person who follows the maxim, “Do not lie if you do not have to”, to serve your material interest. By assuming that the mechanism designer knows that there is at least one partially-honest individual in a society of n≥3 individuals, a social choice rule that can be Nash implemented is termed partially-honestly Nash implementable. The paper offers a complete characterization of the (unanimous) social choice rules that are partially-honestly Nash implementable. When all individuals are partially-honest, then any (unanimous) rule is partially-honestly Nash implementable. An account of the welfare implications of partially-honest Nash implementation is provided in a variety of environments

Natural implementation with semi-responsible agents in pure exchange economies

We study Nash implementation by natural price-quantity mechanisms in pure exchange economies when agents have intrinsic preferences for responsibility. An agent has an intrinsic preference for responsibility if she cares about truth-telling that is in line with the goal of the mechanism designer besides her material well-being. A semi-responsible agent is an agent who, given what her opponents do, acts in an irresponsible manner when a responsible behavior poses obstacles to her material well-being. The class of efficient allocation rules that are Nash implementable is identified provided that there is at least one agent who is semi-responsible. The Walrasian rule is shown to belong to that class.22 p

One-step-ahead implementation

In many situations, agents are involved in an allocation problem that is followed by another allocation problem whose optimal solution depends on how the former problem has been solved. In this paper, we take this dynamic structure of allocation problems as an institutional constraint. By assuming a finite number of allocation problems, one for each period/stage, and by assuming that all agents in society are involved in each allocation problem, a dynamic mechanism is a period-by-period process. This process generates at any period- history a period- mechanism with observable actions and simultaneous moves. We also assume that the objectives that a planner wants to achieve are summarized in a social choice function (SCF), which maps each state (of the world) into a period-by-period outcome process. In each period , this process selects for each state a period- socially optimal outcome conditional on the complete outcome history realized up to period . Heuristically, the SCF is one-step-ahead implementable if there exists a dynamic mechanism such that for each state and each realized period- history, each of its subgame perfect Nash equilibria generates a period-by-period outcome process that coincides with the period-by-period outcome process that the SCF generates at that state from period onwards. We identify a necessary condition for SCFs to be one-step-ahead implemented, one-step-ahead Maskin monotonicity, and show that it is also sufficient under a variant of the condition of no veto-power when there are three or more agents. Finally, we provide an account of welfare implications of one-step-ahead implementability in the contexts of trading decisions and voting problems

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