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Mechanism design and intentions


Bierbrauer, Felix; Netzer, Nick (2016). Mechanism design and intentions. Journal of Economic Theory, 163:557-603.

Abstract

We introduce intention-based social preferences into mechanism design. We explore information structures that differ 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 satisfies an additional insurance property. By contrast, precise information on reciprocity types may imply that all efficient 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 payoff types and their reciprocity types. We also provide a systematic account of the welfare implications of intentionality.

Abstract

We introduce intention-based social preferences into mechanism design. We explore information structures that differ 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 satisfies an additional insurance property. By contrast, precise information on reciprocity types may imply that all efficient 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 payoff types and their reciprocity types. We also provide a systematic account of the welfare implications of intentionality.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
Uncontrolled Keywords:Mechanism design, psychological games, social preferences, reciprocity
Language:English
Date:2016
Deposited On:21 Sep 2016 13:33
Last Modified:21 Sep 2016 13:33
Publisher:Elsevier
ISSN:0022-0531
Publisher DOI:https://doi.org/10.1016/j.jet.2016.02.013

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