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Nash Implementation in Production Economies with Unequal Skills: A Complete Characterization

Listed author(s):
  • Yoshihara, Naoki
  • Yamada, Akira

In production economies with unequal labor skills, where the planner is ignorant to the set of feasible allocations in advance of production, the paper firstly introduces a new axiom, Nonmanipulability of Irrelevant Skills (NIS), which together with Maskin Monotonicity constitute the necessary and sufficient conditions for Nash implementation. Secondly, the paper defines natural mechanisms, and then fully characterizes Nash implementation by natural mechanisms, using a slightly stronger variation of NIS and Supporting Price Independence. Following these characterizations, it is shown that there is a Maskin monotonic allocation rule which is not implementable when information about individual skills is absent. In contrast, many fair allocation rules, which are known to be non-implementable in the present literature, are implementable by the natural mechanisms.

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Paper provided by Center for Research on Contemporary Economic Systems, Graduate School of Economics, Hitotsubashi University in its series CCES Discussion Paper Series with number 38.

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Length: 30 p.
Date of creation: Oct 2010
Handle: RePEc:hit:ccesdp:38
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