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Implementation and Social Influence

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  • Hitoshi Matsushima

    (Faculty of Economics, University of Tokyo)

Abstract

This paper incorporates social psychology into implementation theory. Real individuals care not only about their material benefits but also about their social influence in terms of obedience and conformity. Using a continuous time horizon, we demonstrate a method of manipulating the decision-making process, according to which, an uninformed principal utilizes her/his power of social influence to incentivize multiple informed agents to make honest announcements. Following this method, we show that with incentive compatibility, the principal can implement any alternative as she/he wishes as the unique Nash equilibrium outcome, even if her/his power is limited and no contractual devices are available.

Suggested Citation

  • Hitoshi Matsushima, 2008. "Implementation and Social Influence," CARF F-Series CARF-F-140, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
  • Handle: RePEc:cfi:fseres:cf140
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    File URL: http://www.carf.e.u-tokyo.ac.jp/pdf/workingpaper/fseries/145.pdf
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    References listed on IDEAS

    as
    1. Matsushima, Hitoshi, 2008. "Role of honesty in full implementation," Journal of Economic Theory, Elsevier, vol. 139(1), pages 353-359, March.
    2. Matsushima, Hitoshi, 2008. "Behavioral aspects of implementation theory," Economics Letters, Elsevier, vol. 100(1), pages 161-164, July.
    3. Uri Gneezy, 2005. "Deception: The Role of Consequences," American Economic Review, American Economic Association, vol. 95(1), pages 384-394, March.
    4. Matsushima, Hitoshi, 1988. "A new approach to the implementation problem," Journal of Economic Theory, Elsevier, vol. 45(1), pages 128-144, June.
    5. 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.
    6. Martin J. Osborne & Ariel Rubinstein, 1994. "A Course in Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262650401, January.
    7. Eric Maskin, 1999. "Nash Equilibrium and Welfare Optimality," Review of Economic Studies, Oxford University Press, vol. 66(1), pages 23-38.
    8. Kfir Eliaz, 2002. "Fault Tolerant Implementation," Review of Economic Studies, Oxford University Press, vol. 69(3), pages 589-610.
    9. Abreu Dilip & Matsushima Hitoshi, 1994. "Exact Implementation," Journal of Economic Theory, Elsevier, vol. 64(1), pages 1-19, October.
    10. Bernheim, B Douglas, 1994. "A Theory of Conformity," Journal of Political Economy, University of Chicago Press, vol. 102(5), pages 841-877, October.
    11. Abreu, Dilip & Matsushima, Hitoshi, 1992. "Virtual Implementation in Iteratively Undominated Strategies: Complete Information," Econometrica, Econometric Society, vol. 60(5), pages 993-1008, September.
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