Implementation and Mind Control
AbstractThis paper incorporates social psychology into implementation theory, where an uninformed principal manipulates a dynamic decision-making process without employing any tailored contractual device. We demonstrate the principal's mind-control method through which he can effectively utilize social psychology tactics to incentivize informed agents to announce their information in keeping with his wishes. We show that with incentive compatibility, the principal can implement any alternative that he wishes as the unique Nash equilibrium outcome, even if the psychological cost of each agent from disobeying the principal's wishes is small as compared to his total material benefits.
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Bibliographic InfoPaper provided by CIRJE, Faculty of Economics, University of Tokyo in its series CIRJE F-Series with number CIRJE-F-673.
Date of creation: Sep 2009
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Other versions of this item:
- NEP-ALL-2009-10-24 (All new papers)
- NEP-CBE-2009-10-24 (Cognitive & Behavioural Economics)
- NEP-CTA-2009-10-24 (Contract Theory & Applications)
- NEP-EVO-2009-10-24 (Evolutionary Economics)
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- Martin J Osborne & Ariel Rubinstein, 2009.
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814577000000000225, UCLA Department of Economics.
- Bernheim, B Douglas, 1994. "A Theory of Conformity," Journal of Political Economy, University of Chicago Press, vol. 102(5), pages 841-77, October.
- Uri Gneezy, 2005. "Deception: The Role of Consequences," American Economic Review, American Economic Association, vol. 95(1), pages 384-394, March.
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