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Profit-Sharing and Implementation of Efficient Outcomes

Author

Listed:
  • Ruben Juarez

    (Department of Economics, University of Hawaii)

  • Kohei Nitta

    (Department of Economics, Toyo University)

Abstract

Agents are endowed with time that is invested in different projects that generate profit depending on the allocation of time by the agents. A mechanism divides the profit generated by the projects among agents depending on the allocation of time as well as the amount of profit that every project generates. We study mechanisms that incentivize agents to contribute their time to the level that generates the maximal aggregate profit at the Nash equilibrium regardless of the production functions (efficiency). Our main result is the characterization of all the mechanisms that satisfy efficiency. Furthermore, within this class, a narrow class of mechanisms are monotone in the payoffs of the agents with respect to the addition of agents, time or projects.

Suggested Citation

  • Ruben Juarez & Kohei Nitta, 2017. "Profit-Sharing and Implementation of Efficient Outcomes," Working Papers 201702, University of Hawaii at Manoa, Department of Economics.
  • Handle: RePEc:hai:wpaper:201702
    as

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    File URL: http://www.economics.hawaii.edu/research/workingpapers/WP_17-2.pdf
    File Function: First version, 2017
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    References listed on IDEAS

    as
    1. Hougaard, Jens Leth & Tvede, Mich, 2012. "Truth-telling and Nash equilibria in minimum cost spanning tree models," European Journal of Operational Research, Elsevier, vol. 222(3), pages 566-570.
    2. Ruben Juarez & Rajnish Kumar, 2013. "Implementing efficient graphs in connection networks," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 54(2), pages 359-403, October.
    3. 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.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Profit-sharing; Efficiency; Implementation.;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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