 Constrained implementationTakashi Hayashi and Michele Lombardi Journal of Economic Theory, 2019, vol. 183, issue C, 546-567 Abstract: Consider a society with two sectors (issues or objects) that faces a design problem. Suppose that the sector-2 dimension of the design problem is fixed and represented by a mechanism Γ2, and that the designer operates under this constraint for institutional reasons. A sector-1 mechanism Γ1 constrained implements a social choice rule φ in Nash equilibrium if for each profile of agents' preferences, the set of (pure) Nash equilibrium outcomes of the mechanism Γ1×Γ2 played by agents with those preferences always coincides with the recommendations made by φ for that profile. If this mechanism design exercise could be accomplished, φ would be constrained implementable. We show that constrained monotonicity, a strengthening of (Maskin) monotonicity, is a necessary condition for constrained implementation. When there are more than two agents, and when the designer can use the private information elicited from agents via Γ2 to make a socially optimal decision for sector 1, constrained monotonicity, combined with an auxiliary condition, is sufficient. This sufficiency result does not rule out any kind of complementarity between the two sectors. Keywords: Constrained implementation; Mechanism design; Nash implementation (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:183:y:2019:i:c:p:546-567 DOI: 10.1016/j.jet.2019.06.007 Access Statistics for this article Journal of Economic Theory is currently edited by A. Lizzeri and K. Shell More articles in Journal of Economic Theory from Elsevier |
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