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Honesty-Proof Implementation

  • Hitoshi Matsushima

    (Faculty of Economics, University of Tokyo)

We investigate implementation of social choice functions that map from states to lotteries and may depend on factors other than agents' preferences. We assume that agents are not only purely self-interested but also honesty-oriented in a lexicographical way. We define iterative honesty-proofness by iteratively removing messages dominated by more honest messages. We show that in the complete information environments with small fines, every social choice function is implementable in iterative honesty-proofness. This is in contrast with the standard implementation model, because any 'normative' social choice function depending on non-preference factors is never implementable when agents are not influenced by factors other than pure self-interest. We extend this result to the incomplete information environments with quasi-linearity and with correlated private signals. Next, we assume that it is costly for each agent to report dishonestly and this cost may be close to zero. We show that in the incomplete information environments, every incentive compatible social choice function can be implemented by the mechanism that is universal in the sense that it does not depend on the private signal structure.

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File URL: http://www.cirje.e.u-tokyo.ac.jp/research/dp/2002/2002cf178.pdf
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Paper provided by CIRJE, Faculty of Economics, University of Tokyo in its series CIRJE F-Series with number CIRJE-F-178.

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Length: 33 pages
Date of creation: Oct 2002
Date of revision:
Handle: RePEc:tky:fseres:2002cf178
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  1. Antonio Cabrales, . "Adaptive Dynamics and the Implementation Problem with Complete Information," ELSE working papers 009, ESRC Centre on Economics Learning and Social Evolution.
  2. Ingela Brundin & Ching-to Albert Ma, 1998. "Moral Hazard, Insurance, and Some Collusion," Papers 0089, Boston University - Industry Studies Programme.
  3. Deschamps, Robert & Gevers, Louis, 1978. "Leximin and utilitarian rules: A joint characterization," Journal of Economic Theory, Elsevier, vol. 17(2), pages 143-163, April.
  4. Palfrey, Thomas R & Srivastava, Sanjay, 1991. "Nash Implementation Using Undominated Strategies," Econometrica, Econometric Society, vol. 59(2), pages 479-501, March.
  5. d'ASPREMONT, Claude & GEVERS, Louis, . "Equity and the informational basis of collective choice," CORE Discussion Papers RP -350, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  6. Matthew Rabin., 1992. "Incorporating Fairness into Game Theory and Economics," Economics Working Papers 92-199, University of California at Berkeley.
  7. Abreu, Dilip & Matsushima, Hitoshi, 1992. "Virtual Implementation in Iteratively Undominated Strategies: Complete Information," Econometrica, Econometric Society, vol. 60(5), pages 993-1008, September.
  8. Matsushima, Hitoshi, 1988. "A new approach to the implementation problem," Journal of Economic Theory, Elsevier, vol. 45(1), pages 128-144, June.
  9. Maskin, Eric, 1999. "Nash Equilibrium and Welfare Optimality," Review of Economic Studies, Wiley Blackwell, vol. 66(1), pages 23-38, January.
  10. Matthew Rabin., 1997. "Psychology and Economics," Economics Working Papers 97-251, University of California at Berkeley.
  11. Brian Erard & Jonathan Feinstein, 1993. "Honesty and Evasion in the Tax Compliance Game," Carleton Economic Papers 93-06, Carleton University, Department of Economics, revised 1994.
  12. Roberto Serrano & Rajiv Vohra, . "Type Diversity and Virtual Bayesian Implementation Creation-Date: 2000," Working Papers 2000-16, Brown University, Department of Economics.
  13. Matsushima Hitoshi, 1993. "Bayesian Monotonicity with Side Payments," Journal of Economic Theory, Elsevier, vol. 59(1), pages 107-121, February.
  14. Hitoshi Matsushima, 2002. "Stability and Implementation via Simple Mechanisms in the Complete Information Environments," CIRJE F-Series CIRJE-F-147, CIRJE, Faculty of Economics, University of Tokyo.
  15. Abreu Dilip & Matsushima Hitoshi, 1994. "Exact Implementation," Journal of Economic Theory, Elsevier, vol. 64(1), pages 1-19, October.
  16. Jeffrey C. Ely & Kim-Sau Chung, 2002. "Ex-Post Incentive Compatible Mechanism Design," Discussion Papers 1339, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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