The Theory of Implementation of Social Choice Rules

Roberto Serrano

No 33, Economics Working Papers from Institute for Advanced Study, School of Social Science

Abstract: Suppose that the goals of a society can be summarized in a social choice rule, i.e., a mapping from relevant underlying parameters to final outcomes. Typically, the underlying parameters (e.g., individual preferences) are private information to the agents in society. The implementation problem is then formulated: under what circumstances can one design a mechanism so that the private information is truthfully elicited and the social optimum ends up being implemented? In designing such a mechanism, appropriate incentives will have to be given to the agents so that they do not wish to misrepresent their information. The theory of implementation or mechanism design formalizes this “social engineering” problem and provides answers to the question just posed. I survey the theory of implementation in this article, emphasizing the results based on two behavioral assumptions for the agents (dominant strategies and Nash equilibrium). Examples discussed include voting, and the allocation of private and public goods under complete and incomplete information.

Keywords: Implementation Theory; Mechanism Design; Asymmetric Information; Decentralization; Game Theory; Dominance; Nash Equilibrium; Monotonicity (search for similar items in EconPapers)
JEL-codes: C72 D78 D82 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2003-09
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

Published in SIAM Review vol. 46 (3) 2004 pp. 377-414

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Working Paper: The Theory of Implementation of Social Choice Rules (2003)
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