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Implementation in partial equilibrium

Listed author(s):
  • Hayashi, Takashi
  • Lombardi, Michele
Registered author(s):

    Consider a society with a finite number of sectors (social issues or commodities). In a partial equilibrium (PE) mechanism a sector authority (SA) aims to elicit agents' preference rankings for outcomes at hand, presuming separability of preferences, while such presumption is false in general and such isolated rankings might be artifacts. This paper studies what can be Nash implemented if we take such misspecification of PE analysis as a given institutional constraint. The objective is to uncover the kinds of complementarity across sectors that this institutional constraint is able to accommodate. Thus, in our implementation model there are several SAs, agents are constrained to submit their rankings to each SA separately and, moreover, SAs cannot communicate with each other. When a social choice rule (SCR) can be Nash implemented by a product set of PE mechanisms, we say that it can be Nash implemented in PE. We identify necessary conditions for SCRs to be Nash implemented in PE and show that they are also sufficient under a domain condition which identifies the kinds of admissible complementarities. Thus, the Nash implementation in PE of SCRs is examined in auction and matching environments.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0022053117300091
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    Article provided by Elsevier in its journal Journal of Economic Theory.

    Volume (Year): 169 (2017)
    Issue (Month): C ()
    Pages: 13-34

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    Handle: RePEc:eee:jetheo:v:169:y:2017:i:c:p:13-34
    DOI: 10.1016/j.jet.2017.01.008
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622869

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    10. Moore, John & Repullo, Rafael, 1990. "Nash Implementation: A Full Characterization," Econometrica, Econometric Society, vol. 58(5), pages 1083-1099, September.
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    12. Maskin, Eric & Sjostrom, Tomas, 2002. "Implementation theory," Handbook of Social Choice and Welfare,in: K. J. Arrow & A. K. Sen & K. Suzumura (ed.), Handbook of Social Choice and Welfare, edition 1, volume 1, chapter 5, pages 237-288 Elsevier.
    13. Edward Clarke, 1971. "Multipart pricing of public goods," Public Choice, Springer, vol. 11(1), pages 17-33, September.
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