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Mechanism design and intentions

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  • Bierbrauer, Felix
  • Netzer, Nick

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.

Suggested Citation

  • Bierbrauer, Felix & Netzer, Nick, 2016. "Mechanism design and intentions," Journal of Economic Theory, Elsevier, vol. 163(C), pages 557-603.
    • Handle: RePEc:eee:jetheo:v:163:y:2016:i:c:p:557-603
    DOI: 10.1016/j.jet.2016.02.013
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    More about this item

    Keywords

    Mechanism design; Psychological games; Social preferences; Reciprocity;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law

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