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Process Manipulation in Unique Implementation

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  • Hitoshi Matsushima

    (The University of Tokyo)

Abstract

We incorporate social influence into implementation theory, and highlight the manner in which an informed agent feels guilty with regard to disobeying an uninformed principal’s wishes. The degree of this feeling depends on the agent’s expectation of others’ behavioral modes. We demonstrate a method of process manipulation, through which the principal employs psychological tactics for incentivizing agents to announce information in keeping with his/her wishes. We indicate that with a version of incentive compatibility, the principal can implement any alternative that he/she wishes as the unique Nash equilibrium without employing any contractual devices. Each agent’s psychological cost would be negligible.

Suggested Citation

  • Hitoshi Matsushima, 2008. "Process Manipulation in Unique Implementation," CARF F-Series CARF-F-301, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo, revised Jul 2012.
    • Handle: RePEc:cfi:fseres:cf301
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    References listed on IDEAS

    as
    1. Dutta, Bhaskar & Sen, Arunava, 2012. "Nash implementation with partially honest individuals," Games and Economic Behavior, Elsevier, vol. 74(1), pages 154-169.
    2. Matsushima, Hitoshi, 2008. "Role of honesty in full implementation," Journal of Economic Theory, Elsevier, vol. 139(1), pages 353-359, March.
    3. Lombardi, Michele & Yoshihara, Naoki, 2012. "Natural Implementation with Partially Honest Agents," Discussion Paper Series 561, Institute of Economic Research, Hitotsubashi University.
    4. Eric Maskin, 1999. "Nash Equilibrium and Welfare Optimality," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 66(1), pages 23-38.
    5. Kfir Eliaz, 2002. "Fault Tolerant Implementation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 69(3), pages 589-610.
    6. Bernheim, B Douglas, 1994. "A Theory of Conformity," Journal of Political Economy, University of Chicago Press, vol. 102(5), pages 841-877, October.
    7. , & ,, 2012. "Implementation with evidence," Theoretical Economics, Econometric Society, vol. 7(2), May.
    8. Matsushima, Hitoshi, 2008. "Behavioral aspects of implementation theory," Economics Letters, Elsevier, vol. 100(1), pages 161-164, July.
    9. Martin J. Osborne & Ariel Rubinstein, 1994. "A Course in Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262650401, December.
    10. Geanakoplos, John & Pearce, David & Stacchetti, Ennio, 1989. "Psychological games and sequential rationality," Games and Economic Behavior, Elsevier, vol. 1(1), pages 60-79, March.
    11. Akerlof, George A & Dickens, William T, 1982. "The Economic Consequences of Cognitive Dissonance," American Economic Review, American Economic Association, vol. 72(3), pages 307-319, June.
    12. Uri Gneezy, 2005. "Deception: The Role of Consequences," American Economic Review, American Economic Association, vol. 95(1), pages 384-394, March.
    13. Abreu, Dilip & Matsushima, Hitoshi, 1992. "A Response [Virtual Implementation in Iteratively Undominated Strategies I: Complete Information]," Econometrica, Econometric Society, vol. 60(6), pages 1439-1442, November.
    14. Lombardi, M. & Yoshihara, N., 2012. "National implementation with partially honest agents," Research Memorandum 005, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    15. repec:hal:pseose:halshs-00754592 is not listed on IDEAS
    16. Abreu, Dilip & Matsushima, Hitoshi, 1992. "Virtual Implementation in Iteratively Undominated Strategies: Complete Information," Econometrica, Econometric Society, vol. 60(5), pages 993-1008, September.
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    Cited by:

    1. Hitoshi Matsushima, 2018. "Bank Runs and Minimum Reciprocity," CIRJE F-Series CIRJE-F-1099, CIRJE, Faculty of Economics, University of Tokyo.
    2. Hitoshi Matsushima, 2020. "Implementation, Honesty, and Common Knowledge," CARF F-Series CARF-F-500, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
    3. Hitoshi Matsushima, 2018. "Bank Runs and Minimum Reciprocity," CARF F-Series CARF-F-447, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
    4. Matsushima, Hitoshi, 2022. "Epistemological implementation of social choice functions," Games and Economic Behavior, Elsevier, vol. 136(C), pages 389-402.
    5. Hitoshi Matsushima, 2022. "Honesty and Epistemological Implementation of Social Choice Functions with Asymmetric Information," CARF F-Series CARF-F-549, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.

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