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Implementation and Preference for Honesty

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  • Hitoshi Matsushima

    (Faculty of Economics, University of Tokyo)

Abstract

We investigate implementation of social choice functions that map states to lotteries, where agents have preferences not only for consequences but also for 'honesty'. We show that in the complete information environments with three or more agents, every social choice function is implementable in Nash equilibrium. This is in contrast with the standard implementation models where agents have preferences only for consequences and no social choice function depending on factors other than agents' preferences is implementable. We show also that in the incomplete information environments with two or more agents, every Bayesian incentive compatible social choice function can be implemented in Bayesian Nash equilibrium by a mechanism that is universal in the sense that it does not depend on the detail of the private signal structure.

Suggested Citation

  • Hitoshi Matsushima, 2003. "Implementation and Preference for Honesty," CIRJE F-Series CIRJE-F-244, CIRJE, Faculty of Economics, University of Tokyo.
    • Handle: RePEc:tky:fseres:2003cf244
    as

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    File URL: http://www.cirje.e.u-tokyo.ac.jp/research/dp/2003/2003cf244.pdf
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    References listed on IDEAS

    as
    1. Matsushima Hitoshi, 1993. "Bayesian Monotonicity with Side Payments," Journal of Economic Theory, Elsevier, vol. 59(1), pages 107-121, February.
    2. Deneckere,R. & Severinov,S., 2001. "Mechanism design and communication costs," Working papers 23, Wisconsin Madison - Social Systems.
    3. Roberto Serrano & Rajiv Vohra, 2000. "Type Diversity and Virtual Bayesian Implementation Creation-Date: 2000," Working Papers 2000-16, Brown University, Department of Economics.
    4. Alger, Ingela & Albert Ma, Ching-to, 2003. "Moral hazard, insurance, and some collusion," Journal of Economic Behavior & Organization, Elsevier, vol. 50(2), pages 225-247, February.
    5. 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.
    6. K. J. Arrow & A. K. Sen & K. Suzumura (ed.), 2002. "Handbook of Social Choice and Welfare," Handbook of Social Choice and Welfare, Elsevier, edition 1, volume 1, number 1.
    7. Matsushima, Hitoshi, 1988. "A new approach to the implementation problem," Journal of Economic Theory, Elsevier, vol. 45(1), pages 128-144, June.
    8. 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.
    9. Abreu Dilip & Matsushima Hitoshi, 1994. "Exact Implementation," Journal of Economic Theory, Elsevier, vol. 64(1), pages 1-19, October.
    Full references (including those not matched with items on IDEAS)

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