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Mechanism Design and Intentions

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  • Felix Bierbrauer

    (Max Planck Institute for Research on Collective Goods, Bonn)

  • Nick Netzer

    (University of Zurich)

Abstract

We introduce intention-based social preferences into mechanism design. We explore information structures that dier with respect to what is commonly known about the weight that agents attach to reciprocal kindness. When the designer has no information on reciprocity types, implementability of an incentive-compatible social choice function is guaranteed if it satises an additional insurance property. By contrast, precise information on reciprocity types may imply that all ecient social choice functions are implementable. We show how these results extend to a two-dimensional mechanism design setting where the agents have private information about their material payo types and their reciprocity types. We also provide a systematic account of the welfare implications of intentionality.

Suggested Citation

  • Felix Bierbrauer & Nick Netzer, 2016. "Mechanism Design and Intentions," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2016_04, Max Planck Institute for Research on Collective Goods.
  • Handle: RePEc:mpg:wpaper:2016_04
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    More about this item

    Keywords

    Mechanism Design; Psychological Games; Social Preferences; Reciprocity;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law

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