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 principal's wishes. The degree of this feeling depends on the agent's expectation of others' 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 agent's psychological cost would be negligible.
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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-870.
Length: 20 pages
Date of creation: Nov 2012
Date of revision:
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Other versions of this item:
- NEP-ALL-2012-12-06 (All new papers)
- NEP-CTA-2012-12-06 (Contract Theory & Applications)
- NEP-MIC-2012-12-06 (Microeconomics)
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