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Mechanism design and intentions

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  • Felix Bierbrauer
  • Nick Netzer

Abstract

We introduce intention-based social preferences into a mechanism design framework with independent private values and quasilinear payoffs. For the case where the designer has no information about the intensity of social preferences, we provide conditions under which mechanisms which have been designed under the assumption that agents are selfish can still be implemented. For the case where precise information about social preferences is available, we show that any tension between efficiency, incentive-compatibility, and voluntary participation may disappear. Impossibility results such as the one by Myerson and Satterthwaite (1983) are then turned into possibility results. We also provide a systematic account of the welfare implications of kindness sensations.

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Paper provided by Department of Economics - University of Zurich in its series ECON - Working Papers with number 066.

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Date of creation: Mar 2012
Date of revision: Apr 2014
Handle: RePEc:zur:econwp:066

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Keywords: Mechanism design; psychological games; social preferences; reciprocity;

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Cited by:
  1. Björn Bartling & Nick Netzer, 2014. "An Externality-Robust Auction: Theory and Experimental Evidence," CESifo Working Paper Series 4771, CESifo Group Munich.
  2. Björn Bartling & Nick Netzer, 2014. "An externality-robust auction: theory and experimental evidence," ECON - Working Papers 153, Department of Economics - University of Zurich.
  3. Geoffroy de Clippel & Kfir Eliaz & Brian Knight, 2012. "On the Selection of Arbitrators," Working Papers 2012-8, Brown University, Department of Economics.

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