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

  • Hitoshi Matsushima

    (Faculty of Economics, University of Tokyo)

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.

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File URL: http://www.cirje.e.u-tokyo.ac.jp/research/dp/2004/2004cf304.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-304.

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Length: 27 pages
Date of creation: Oct 2004
Date of revision:
Handle: RePEc:tky:fseres:2004cf304
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  1. Matsushima, Hitoshi, 1988. "A new approach to the implementation problem," Journal of Economic Theory, Elsevier, vol. 45(1), pages 128-144, June.
  2. 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.
  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. Eliaz, Kfir, 2002. "Fault Tolerant Implementation," Review of Economic Studies, Wiley Blackwell, vol. 69(3), pages 589-610, July.
  5. Jean Tirole, 1999. "Incomplete Contracts: Where Do We Stand?," Econometrica, Econometric Society, vol. 67(4), pages 741-782, July.
  6. Kfir Eliaz, 2002. "Fault Tolerant Implementation," Review of Economic Studies, Oxford University Press, vol. 69(3), pages 589-610.
  7. Ching-to Albert Ma & Ingela Alger, 1999. "Moral Hazard, Insurance and Some Collusion," FMG Discussion Papers dp318, Financial Markets Group.
  8. Matsushima Hitoshi, 1993. "Bayesian Monotonicity with Side Payments," Journal of Economic Theory, Elsevier, vol. 59(1), pages 107-121, February.
  9. Roberto Serrano & Rajiv Vohra, . "Type Diversity and Virtual Bayesian Implementation Creation-Date: 2000," Working Papers 2000-16, Brown University, Department of Economics.
  10. Martin J Osborne & Ariel Rubinstein, 2009. "A Course in Game Theory," Levine's Bibliography 814577000000000225, UCLA Department of Economics.
  11. Abreu, Dilip & Matsushima, Hitoshi, 1992. "Virtual Implementation in Iteratively Undominated Strategies: Complete Information," Econometrica, Econometric Society, vol. 60(5), pages 993-1008, September.
  12. Maskin, Eric, 1999. "Nash Equilibrium and Welfare Optimality," Review of Economic Studies, Wiley Blackwell, vol. 66(1), pages 23-38, January.
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