Process Manipulation in Unique Implementation
AbstractWe incorporate social influence into implementation theory, and highlight the manner in which an informed agent feels guilty with regard to disobeying an uninformed principalâ€™s wishes. The degree of this feeling depends on the agentâ€™s expectation of othersâ€™ behavioral modes. We demonstrate a method of process manipulation, through which the principal employs psychological tactics for incentivizing agents to announce information in keeping with his/her wishes. We indicate that with a version of incentive compatibility, the principal can implement any alternative that he/she wishes as the unique Nash equilibrium without employing any contractual devices. Each agentâ€™s psychological cost would be negligible.
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Bibliographic InfoPaper provided by Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo in its series CARF F-Series with number CARF-F-301.
Length: 19 pages
Date of creation: Dec 2008
Date of revision: Jul 2012
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