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Natural Implementation with Partially Honest Agents in Economic Environments

Michele Lombardi and Naoki Yoshihara (nyoshihara@econs.umass.edu)

No 592, Discussion Paper Series from Institute of Economic Research, Hitotsubashi University

Abstract: In this paper, we introduce the weak and the strong notions of partially honest agents (Dutta and Sen, 2012), and then study implementation by natural price-quantity mechanisms (Saijo et al., 1996, 1999) in pure exchange economies with three or more agents in which pure-consequentialistically rational agents and partially honest agents coexist. Firstly, assuming that there exists at least one partially honest agent in either the weak notion or the strong notion, the class of efficient social choice correspondences which are Nash-implementable by such mechanisms is characterized. Secondly, the (unconstrained) Walrasian correspondence is shown to be implementable by such a mechanism when there is at least one partially honest agent of the strong type, which may provide a behavioral foundation for decentralized implementation of the Walrasian equilibrium. Finally, in this set-up, the effects of honesty on the implementation of more equitable Pareto optimal allocations can be viewed as negligible.

Keywords: Natural implementation; Nash equilibrium; exchange economies; intrinsic preferences for honesty (search for similar items in EconPapers)
JEL-codes: C72 D71 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2013-07
New Economics Papers: this item is included in nep-gth and nep-mic
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