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Natural Implementation with Partially Honest Agents in Economic Environments

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  • Lombardi, Michele
  • Yoshihara, Naoki

Abstract

In this paper, we introduce the weak and the strong notions of partially honest agents (Dutta and Sen, 2012), and then study implementation by natural price-quantity mechanisms (Saijo et al., 1996, 1999) in pure exchange economies with three or more agents in which pure-consequentialistically rational agents and partially honest agents coexist. Firstly, assuming that there exists at least one partially honest agent in either the weak notion or the strong notion, the class of efficient social choice correspondences which are Nash-implementable by such mechanisms is characterized. Secondly, the (unconstrained) Walrasian correspondence is shown to be implementable by such a mechanism when there is at least one partially honest agent of the strong type, which may provide a behavioral foundation for decentralized implementation of the Walrasian equilibrium. Finally, in this set-up, the effects of honesty on the implementation of more equitable Pareto optimal allocations can be viewed as negligible.

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File URL: http://hermes-ir.lib.hit-u.ac.jp/rs/bitstream/10086/25818/4/DP592.pdf
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Bibliographic Info

Paper provided by Institute of Economic Research, Hitotsubashi University in its series Discussion Paper Series with number 592.

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Length: 27 p.
Date of creation: Jul 2013
Date of revision:
Handle: RePEc:hit:hituec:592

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Keywords: Natural implementation; Nash equilibrium; exchange economies; intrinsic preferences for honesty;

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References

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  1. Matsushima, Hitoshi, 2008. "Role of honesty in full implementation," Journal of Economic Theory, Elsevier, vol. 139(1), pages 353-359, March.
  2. Amartya Sen, 1996. "Maximization and the Act of Choice," Harvard Institute of Economic Research Working Papers 1766, Harvard - Institute of Economic Research.
  3. Suzumura, Kotaro & Xu, Yongsheng, 2000. "Characterizations of Consequentialism and Non-consequentialism," Discussion Paper 3, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
  4. Hitoshi Matsushima, 2007. "Behavioral Aspects of Implementation Theory," CIRJE F-Series CIRJE-F-523, CIRJE, Faculty of Economics, University of Tokyo.
  5. Lombardi, Michele & Yoshihara, Naoki, 2011. "Partially-honest Nash implementation: Characterization results," MPRA Paper 28838, University Library of Munich, Germany.
  6. Otani, Yoshihiko & Sicilian, Joseph, 1982. "Equilibrium allocations of Walrasian preference games," Journal of Economic Theory, Elsevier, vol. 27(1), pages 47-68, June.
  7. Jon Elster, 1998. "Emotions and Economic Theory," Journal of Economic Literature, American Economic Association, vol. 36(1), pages 47-74, March.
  8. Kfir Eliaz, 2002. "Fault Tolerant Implementation," Review of Economic Studies, Oxford University Press, vol. 69(3), pages 589-610.
  9. Samuel Bowles & Herbert Gintis, 2000. "Walrasian Economics in Retrospect," UMASS Amherst Economics Working Papers 2000-04, University of Massachusetts Amherst, Department of Economics.
  10. Matthew 0. Jackson, 1989. "Implementation in Undominated Strategies - A Look at Bounded Mechanisms," Discussion Papers 833, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  11. Lombardi, Michele & Yoshihara, Naoki, 2013. "Partially Honest Nash Implementation:A Full Characterization," CCES Discussion Paper Series 49, Center for Research on Contemporary Economic Systems, Graduate School of Economics, Hitotsubashi University.
  12. Lombardi Michele & Yoshihara Naoki, 2010. "A Full Characterization of Nash Implementation with Strategy Space Reduction," Research Memorandum 023, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  13. Luis Corchón & Carmen Herrero Blanco, 1995. "A Decent Proposal," Working Papers. Serie AD 1995-25, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  14. Saijo, Tatsuyoshi & Tatamitani, Yoshikatsu & Yamato, Takehiko, 1999. "Characterizing Natural Implementability: The Fair and Walrasian Correspondences," Games and Economic Behavior, Elsevier, vol. 28(2), pages 271-293, August.
  15. Dutta, Bhaskar & Sen, Arunava, 1991. "A Necessary and Sufficient Condition for Two-Person Nash Implementation," Review of Economic Studies, Wiley Blackwell, vol. 58(1), pages 121-28, January.
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  17. Glazer, Jacob & Rubinstein, Ariel, 1998. "Motives and Implementation: On the Design of Mechanisms to Elicit Opinions," Journal of Economic Theory, Elsevier, vol. 79(2), pages 157-173, April.
  18. Eliaz, Kfir, 2002. "Fault Tolerant Implementation," Review of Economic Studies, Wiley Blackwell, vol. 69(3), pages 589-610, July.
  19. Lombardi Michele & Yoshihara Naoki, 2012. "Natural implementation with partially hones agents," Research Memorandum 005, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
  20. Kreps, David M, 1997. "Intrinsic Motivation and Extrinsic Incentives," American Economic Review, American Economic Association, vol. 87(2), pages 359-64, May.
  21. Schmeidler, David, 1980. "Walrasian Analysis via Strategic Outcome Functions," Econometrica, Econometric Society, vol. 48(7), pages 1585-93, November.
  22. Thomson, William, 1984. "The Manipulability of Resource Allocation Mechanisms," Review of Economic Studies, Wiley Blackwell, vol. 51(3), pages 447-60, July.
  23. Hurwicz, L, 1979. "Outcome Functions Yielding Walrasian and Lindahl Allocations at Nash Equilibrium Points," Review of Economic Studies, Wiley Blackwell, vol. 46(2), pages 217-25, April.
  24. Elster, Jon, 1989. "Social Norms and Economic Theory," Journal of Economic Perspectives, American Economic Association, vol. 3(4), pages 99-117, Fall.
  25. Dutta, Bhaskar & Sen, Arunava, 2009. "Nash Implementation with Partially Honest Individuals," The Warwick Economics Research Paper Series (TWERPS) 920, University of Warwick, Department of Economics.
  26. Maskin, Eric, 1999. "Nash Equilibrium and Welfare Optimality," Review of Economic Studies, Wiley Blackwell, vol. 66(1), pages 23-38, January.
  27. Tian, Guoqiang, 2000. "Incentive Mechanism Design for Production Economies with Both Private and Public Ownerships," Games and Economic Behavior, Elsevier, vol. 33(2), pages 294-320, November.
  28. Saijo, Tatsuyoshi & Tatamitani, Yoshikatsu & Yamato, Takehiko, 1996. "Toward Natural Implementation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(4), pages 949-80, November.
  29. Moore, John & Repullo, Rafael, 1990. "Nash Implementation: A Full Characterization," Econometrica, Econometric Society, vol. 58(5), pages 1083-99, September.
  30. Postlewaite, Andrew & Wettstein, David, 1989. "Feasible and Continuous Implementation," Review of Economic Studies, Wiley Blackwell, vol. 56(4), pages 603-11, October.
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