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Implementation and Partial Provability

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  • Elchanan Ben-Porath

    ()
    (Department of Economics and Center for Rationality, Hebrew University)

  • Barton L. Lipman

    ()
    (Department of Economics, Boston University)

Abstract

We extend implementation theory by allowing the social choice function to depend on more than just the pro le of preferences of the agents and by allowing agents to support their statements with hard evidence. We show that a simple condition on the evidence structure which is necessary for the implementation of a social choice function f when the preferences of the agents are state independent is also sufficient for implementation for any preferences (including state dependent) if the social planner can perform small monetary transfers and there are at least three players. If transfers can be large, f can be implemented in a game with perfect information when there are at least two players under an additional boundedness assumption. In both cases, transfers only occur off the equilibrium path. Finally, in the special but important case of allocation problems, under weak conditions, f can be implemented in a perfect information game with at least two players and no transfers. In all cases, the use of evidence enables implementation which is robust in the sense that the social planner needs very little information about the preferences, beliefs, and evidence of the agents and the agents need little information about each others' preferences.

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Bibliographic Info

Paper provided by Boston University - Department of Economics in its series Boston University - Department of Economics - Working Papers Series with number wp2009-002.

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Length: 41
Date of creation: Apr 2009
Date of revision:
Handle: RePEc:bos:wpaper:wp2009-002

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References

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  1. Bull, Jesse & Watson, Joel, 2000. "Evidence Disclosure and Verifiability," University of California at San Diego, Economics Working Paper Series qt6th0060j, Department of Economics, UC San Diego.
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  13. Abreu, Dilip & Matsushima, Hitoshi, 1992. "Virtual Implementation in Iteratively Undominated Strategies: Complete Information," Econometrica, Econometric Society, vol. 60(5), pages 993-1008, September.
  14. Ingela Brundin & Ching-to Albert Ma, 1998. "Moral Hazard, Insurance, and Some Collusion," Papers 0089, Boston University - Industry Studies Programme.
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  16. Navin Kartik & Olivier Tercieux, 2009. "Implementation with Evidence: Complete Information," Economics Working Papers 0087, Institute for Advanced Study, School of Social Science, revised May 2009.
  17. Moore, John & Repullo, Rafael, 1988. "Subgame Perfect Implementation," Econometrica, Econometric Society, vol. 56(5), pages 1191-1220, September.
  18. Deneckere, Raymond & Severinov, Sergei, 2008. "Mechanism design with partial state verifiability," Games and Economic Behavior, Elsevier, vol. 64(2), pages 487-513, November.
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  23. Paul R. Milgrom, 1979. "Good Nevs and Bad News: Representation Theorems and Applications," Discussion Papers 407R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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Cited by:
  1. Sher, Itai & Vohra, Rakesh, 0. "Price discrimination through communication," Theoretical Economics, Econometric Society.
  2. Christopher Cotton, 2009. "Competition for Access and Full Revelation of Evidence," Working Papers 2010-12, University of Miami, Department of Economics.

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