Mechanism Design and Intentions

Felix Bierbrauer and Nick Netzer

No 53, Working Paper Series in Economics from University of Cologne, Department of Economics

Abstract: We introduce intention-based social preferences into a Bayesian mechanism design framework. We first show that, under common knowledge of social preferences, any tension between material efficiency, incentive compatibility, and voluntary participation can be resolved. Hence, famous impossibility results such as the one by Myerson and Satterthwaite (1983) are turned into possibility results. Second, we provide a systematic account of the welfare implications of kindness sensations. Finally, we turn to an environment without common knowledge of social preferences and introduce the notion of a psychologically robust mechanism. Such a mechanism can be implemented without information about the type or the intensity of social preferences. We show that the mechanisms which have been the focus of the conventional mechanism design literature can be modified to achieve psychological robustness.

Keywords: Mechanism Design; Psychological Games; Social Preferences; Intentions; Reciprocity; Revelation Principle (search for similar items in EconPapers)
JEL-codes: C70 C72 D02 D03 D82 D86 (search for similar items in EconPapers)
Date: 2012-03-12, Revised 2012-08-21
New Economics Papers: this item is included in nep-cbe and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Mechanism design and intentions (2016)
Working Paper: Mechanism Design and Intentions (2016)
Working Paper: Mechanism design and intentions (2014)
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