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Non-Consequential Moral Preferences, Detail-Free Implementation, and Representative Systems

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  • Hitoshi Matsushima

    (Faculty of Economics, University of Tokyo)

Abstract

We investigate implementation of social choice functions where the central planner has no knowledge about the detail of model specifications, and only a few individuals participate in the mechanism. In contrast with the standard model of implementation, each agent has non-consequential moral preference in that she prefers truth-telling to lying whenever the resulting consequence is unchanged. We show that with complete information, there exists a single, detail-free mechanism that can implement any social choice function whenever agents regard its value as being socially desirable. This result holds even if psychological cost for lying is close to zero. Non-consequential moral preferences play a very powerful role in eliminating unwanted equilibria in detail-free mechanism design with representative systems. We extend this result to incomplete information.

Suggested Citation

  • Hitoshi Matsushima, 2004. "Non-Consequential Moral Preferences, Detail-Free Implementation, and Representative Systems," CIRJE F-Series CIRJE-F-304, CIRJE, Faculty of Economics, University of Tokyo.
  • Handle: RePEc:tky:fseres:2004cf304
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    File URL: http://www.cirje.e.u-tokyo.ac.jp/research/dp/2004/2004cf304.pdf
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    References listed on IDEAS

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    1. Matsushima Hitoshi, 1993. "Bayesian Monotonicity with Side Payments," Journal of Economic Theory, Elsevier, vol. 59(1), pages 107-121, February.
    2. Matsushima, Hitoshi, 1988. "A new approach to the implementation problem," Journal of Economic Theory, Elsevier, vol. 45(1), pages 128-144, June.
    3. 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.
    4. Eric Maskin, 1999. "Nash Equilibrium and Welfare Optimality," Review of Economic Studies, Oxford University Press, vol. 66(1), pages 23-38.
    5. Kfir Eliaz, 2002. "Fault Tolerant Implementation," Review of Economic Studies, Oxford University Press, vol. 69(3), pages 589-610.
    6. Roberto Serrano & Rajiv Vohra, 2000. "Type Diversity and Virtual Bayesian Implementation Creation-Date: 2000," Working Papers 2000-16, Brown University, Department of Economics.
    7. Alger, Ingela & Albert Ma, Ching-to, 2003. "Moral hazard, insurance, and some collusion," Journal of Economic Behavior & Organization, Elsevier, vol. 50(2), pages 225-247, February.
    8. Brian Erard & Jonathan S. Feinstein, 1994. "Honesty and Evasion in the Tax Compliance Game," RAND Journal of Economics, The RAND Corporation, vol. 25(1), pages 1-19, Spring.
    9. Jean Tirole, 1999. "Incomplete Contracts: Where Do We Stand?," Econometrica, Econometric Society, vol. 67(4), pages 741-782, July.
    10. Martin J. Osborne & Ariel Rubinstein, 1994. "A Course in Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262650401, January.
    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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    Cited by:

    1. Hitoshi Matsushima, 2005. "Mechanism Design with Side Payments: Individual Rationality and Iterative Dominance ( Published in "Journal of Economic Theory" (as a regular article). )," CARF F-Series CARF-F-050, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
    2. Matsushima, Hitoshi, 2007. "Mechanism design with side payments: Individual rationality and iterative dominance," Journal of Economic Theory, Elsevier, vol. 133(1), pages 1-30, March.

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