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Implementation by Sortition in Nonexclusive Information Economies

Author

Listed:
  • Rene Saran

    (Yale University)

  • Norovsambuu Tumennasan

    (Department of Economics and Business Economics, Aarhus University, Denmark and IZA)

Abstract

We study the Bayesian implementation problem in economies that are divided into groups consisting of two or more individuals with the same information. Our results cover problems like that of allocating public funds among states, regulating activities causing externalities among firms, locating public facilities in neighborhoods, electing candidates from multiple districts etc. Instead of the standard communication protocol of direct democracy whereby the planner consults all individuals, we analyze sortition schemes whereby the planner consults only a subset of the individuals, called senators, who are selected via some kleroterion (i.e., a lottery machine) p. In general environments, under mild "economic" assumptions on preferences, we show that every social choice function (SCF) that is implementable by direct democracy is also p-implementable if p always selects two or more individuals from each group and the selection process does not partition any group into "disconnected" subgroups (in the sense that individuals belonging to different subgroups are never selected together). In quasilinear environments satisfying a generic condition on individuals' beliefs, every SCF can be implemented by a simple and economically meaningful mechanism in which the kleroterion selects a predesignated group leader and one other randomly chosen individual from each group.

Suggested Citation

  • Rene Saran & Norovsambuu Tumennasan, 2015. "Implementation by Sortition in Nonexclusive Information Economies," Economics Working Papers 2015-13, Department of Economics and Business Economics, Aarhus University.
    • Handle: RePEc:aah:aarhec:2015-13
    as

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    References listed on IDEAS

    as
    1. Palfrey, Thomas R & Srivastava, Sanjay, 1989. "Implementation with Incomplete Information in Exchange Economies," Econometrica, Econometric Society, vol. 57(1), pages 115-134, January.
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    More about this item

    Keywords

    Bayesian implementation; Nonexclusive information; p-Implementation; Sortition;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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