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Honesty-Proof Implementation

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Author Info
Hitoshi Matsushima (Faculty of Economics, University of Tokyo)

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Abstract

We investigate implementation of social choice functions that map from states to lotteries and may depend on factors other than agents' preferences. We assume that agents are not only purely self-interested but also honesty-oriented in a lexicographical way. We define iterative honesty-proofness by iteratively removing messages dominated by more honest messages. We show that in the complete information environments with small fines, every social choice function is implementable in iterative honesty-proofness. This is in contrast with the standard implementation model, because any 'normative' social choice function depending on non-preference factors is never implementable when agents are not influenced by factors other than pure self-interest. We extend this result to the incomplete information environments with quasi-linearity and with correlated private signals. Next, we assume that it is costly for each agent to report dishonestly and this cost may be close to zero. We show that in the incomplete information environments, every incentive compatible social choice function can be implemented by the mechanism that is universal in the sense that it does not depend on the private signal structure.

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Paper provided by CIRJE, Faculty of Economics, University of Tokyo in its series CIRJE F-Series with number CIRJE-F-178.

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Length: 33 pages
Date of creation: Oct 2002
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Handle: RePEc:tky:fseres:2002cf178

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  1. Matsushima, Hitoshi, 1988. "A new approach to the implementation problem," Journal of Economic Theory, Elsevier, vol. 45(1), pages 128-144, June. [Downloadable!] (restricted)
  2. Michihiro Kandori, 2002. "The Erosion and Sustainability of Norms and Morale," Levine's Bibliography 506439000000000030, UCLA Department of Economics. [Downloadable!]
  3. Brian Erard & Jonathan S. Feinstein, 1994. "Honesty and Evasion in the Tax Compliance Game," RAND Journal of Economics, The RAND Corporation, vol. 25(1), pages 1-19, Spring. [Downloadable!] (restricted)
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  4. Michihiro Kandori, 2002. "The Erosion and Sustainability of Norms and Morale," CIRJE F-Series CIRJE-F-169, CIRJE, Faculty of Economics, University of Tokyo. [Downloadable!]
  5. Matthew Rabin, 1998. "Psychology and Economics," Journal of Economic Literature, American Economic Association, vol. 36(1), pages 11-46, March. [Downloadable!] (restricted)
  6. Palfrey, Thomas R & Srivastava, Sanjay, 1991. "Nash Implementation Using Undominated Strategies," Econometrica, Econometric Society, vol. 59(2), pages 479-501, March. [Downloadable!] (restricted)
  7. Serrano, Roberto & Vohra, Rajiv, 2001. "Some Limitations of Virtual Bayesian Implementation," Econometrica, Econometric Society, vol. 69(3), pages 785-92, May.
  8. repec:att:wimass:1920123 is not listed on IDEAS
  9. Moore, John & Repullo, Rafael, 1988. "Subgame Perfect Implementation," Econometrica, Econometric Society, vol. 56(5), pages 1191-1220, September. [Downloadable!] (restricted)
  10. Jeffrey C. Ely & Kim-Sau Chung, 2002. "Ex-Post Incentive Compatible Mechanism Design," Discussion Papers 1339, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
  11. Ching-to Albert Ma & Ingela Alger, 1999. "Moral Hazard, Insurance and Some Collusion," FMG Discussion Papers dp318, Financial Markets Group. [Downloadable!] (restricted)
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  12. Hitoshi Matsushima, 2002. "Stability and Implementation via Simple Mechanisms in the Complete Information Environments," CIRJE F-Series CIRJE-F-147, CIRJE, Faculty of Economics, University of Tokyo. [Downloadable!]
  13. Matsushima Hitoshi, 1993. "Bayesian Monotonicity with Side Payments," Journal of Economic Theory, Elsevier, vol. 59(1), pages 107-121, February. [Downloadable!] (restricted)
  14. Abreu Dilip & Matsushima Hitoshi, 1994. "Exact Implementation," Journal of Economic Theory, Elsevier, vol. 64(1), pages 1-19, October. [Downloadable!] (restricted)
  15. Maskin, Eric, 1999. "Nash Equilibrium and Welfare Optimality," Review of Economic Studies, Blackwell Publishing, vol. 66(1), pages 23-38, January. [Downloadable!] (restricted)
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  16. John Duggan, 1997. "Virtual Bayesian Implementation," Econometrica, Econometric Society, vol. 65(5), pages 1175-1200, September.
  17. Deschamps, Robert & Gevers, Louis, 1978. "Leximin and utilitarian rules: A joint characterization," Journal of Economic Theory, Elsevier, vol. 17(2), pages 143-163, April. [Downloadable!] (restricted)
  18. Jackson, Matthew O, 1991. "Bayesian Implementation," Econometrica, Econometric Society, vol. 59(2), pages 461-77, March. [Downloadable!] (restricted)
  19. Cabrales, Antonio, 1999. "Adaptive Dynamics and the Implementation Problem with Complete Information," Journal of Economic Theory, Elsevier, vol. 86(2), pages 159-184, June. [Downloadable!] (restricted)
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  20. Zvika Neeman, 1998. "The Relevance of Private Information in Mechanism Design," Papers 0093, Boston University - Industry Studies Programme.
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  21. Abreu, D. & Matsushima, H., 1991. "Virtual Implementation in Iteratively Undominated Strategies: Incomplete Information," Papers e-91-2, Stanford - Hoover Institution.
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  22. Stephen Morris & Dirk Bergemann, 2004. "Robust Mechanism Design," Yale School of Management Working Papers ysm380, Yale School of Management. [Downloadable!]
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  23. Abreu, Dilip & Sen, Arunava, 1991. "Virtual Implementation in Nash Equilibrium," Econometrica, Econometric Society, vol. 59(4), pages 997-1021, July. [Downloadable!] (restricted)
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  24. Amartya Sen, 1999. "The Possibility of Social Choice," American Economic Review, American Economic Association, vol. 89(3), pages 349-378, June. [Downloadable!] (restricted)
  25. Geanakoplos, John & Pearce, David & Stacchetti, Ennio, 1989. "Psychological games and sequential rationality," Games and Economic Behavior, Elsevier, vol. 1(1), pages 60-79, March. [Downloadable!] (restricted)
  26. d'Aspremont, Claude & Gevers, Louis, 1977. "Equity and the Informational Basis of Collective Choice," Review of Economic Studies, Blackwell Publishing, vol. 44(2), pages 199-209, June. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Schmitz, Patrick W., 2006. "Optimal Selling Strategies When Buyers May Have Hard Information," CEPR Discussion Papers 5747, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  2. Stephanie Rosenkranz & Patrick W. Schmitz, 2005. "Reserve prices in auctions as reference points," Bonn Econ Discussion Papers bgse24_2005, University of Bonn, Germany. [Downloadable!]
    Other versions:
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