IDEAS home Printed from https://ideas.repec.org/p/kgu/wpaper/12.html
   My bibliography  Save this paper

Informed Planner, Decentralized Decisions And Incentive Compatibility

Author

Listed:
  • Manimay Sengupta

    (School of Economics, Kwansei Gakuin University)

Abstract

The results on the design of incentive compatible mechanisms for implementing public decisions establish that there is no general solution to the incentive problem if the mechanisms are required to be informationally decentralized. However, even when the planner possesses the knowledge of the agents' characteristics, he may need to reach these decisions through a decentralized decision mechanism, in which the agents act in accordance with their incentives to select the public decision. Thus, even within a complete information model with an informed planner, one may need to find mechanisms that implement public decisions via decentralized decisions of the agents. We show that there exists a mechanism which resolves this problem.

Suggested Citation

  • Manimay Sengupta, 1996. "Informed Planner, Decentralized Decisions And Incentive Compatibility," Discussion Paper Series 12, School of Economics, Kwansei Gakuin University, revised Oct 1996.
    • Handle: RePEc:kgu:wpaper:12
    as

    Download full text from publisher

    File URL: http://192.218.163.163/RePEc/pdf/kgdp12.pdf
    File Function: First version, 1996
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Groves, Theodore & Ledyard, John O, 1977. "Optimal Allocation of Public Goods: A Solution to the "Free Rider" Problem," Econometrica, Econometric Society, vol. 45(4), pages 783-809, May.
    2. Myerson, Roger B, 1983. "Mechanism Design by an Informed Principal," Econometrica, Econometric Society, vol. 51(6), pages 1767-1797, November.
    3. Laffont, Jean-Jacques & Tirole, Jean, 1986. "Using Cost Observation to Regulate Firms," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 614-641, June.
    4. Green, Jerry & Laffont, Jean-Jacques, 1977. "Characterization of Satisfactory Mechanisms for the Revelation of Preferences for Public Goods," Econometrica, Econometric Society, vol. 45(2), pages 427-438, March.
    5. Hurwicz, Leonid, 1979. "On allocations attainable through Nash equilibria," Journal of Economic Theory, Elsevier, vol. 21(1), pages 140-165, August.
    6. repec:bla:econom:v:59:y:1992:i:234:p:161-77 is not listed on IDEAS
    7. Bernheim, B Douglas, 1984. "Rationalizable Strategic Behavior," Econometrica, Econometric Society, vol. 52(4), pages 1007-1028, July.
    8. James A. Mirrlees, 1976. "The Optimal Structure of Incentives and Authority Within an Organization," Bell Journal of Economics, The RAND Corporation, vol. 7(1), pages 105-131, Spring.
    9. Hurwicz, Leonid & Schmeidler, David, 1978. "Construction of Outcome Functions Guaranteeing Existence and Pareto Optimality of Nash Equilibria," Econometrica, Econometric Society, vol. 46(6), pages 1447-1474, November.
    10. Myerson, Roger B., 1982. "Optimal coordination mechanisms in generalized principal-agent problems," Journal of Mathematical Economics, Elsevier, vol. 10(1), pages 67-81, June.
    11. Edward Clarke, 1971. "Multipart pricing of public goods," Public Choice, Springer, vol. 11(1), pages 17-33, September.
    12. Groves, Theodore & Loeb, Martin, 1975. "Incentives and public inputs," Journal of Public Economics, Elsevier, vol. 4(3), pages 211-226, August.
    13. Drew Fudenberg & Jean Tirole, 1991. "Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061414, April.
    14. Green, Jerry & Laffont, Jean-Jacques, 1977. "On the revelation of preferences for public goods," Journal of Public Economics, Elsevier, vol. 8(1), pages 79-93, August.
    15. Roberts, Donald John & Postlewaite, Andrew, 1976. "The Incentives for Price-Taking Behavior in Large Exchange Economies," Econometrica, Econometric Society, vol. 44(1), pages 115-127, January.
    16. Peter J. Hammond, 1979. "Straightforward Individual Incentive Compatibility in Large Economies," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 46(2), pages 263-282.
    17. Sen, Manimay, 1983. "Implementable social choice rules : Characterization and correspondence theorems under strong nash equilibrium," Journal of Mathematical Economics, Elsevier, vol. 11(1), pages 1-24, January.
    18. Conn, David, 1983. "The scope of satisfactory mechanisms for the provision of public goods," Journal of Public Economics, Elsevier, vol. 20(2), pages 249-263, March.
    19. d'Aspremont, Claude & Gerard-Varet, Louis-Andre, 1979. "Incentives and incomplete information," Journal of Public Economics, Elsevier, vol. 11(1), pages 25-45, February.
    20. Pattanaik, Prasanta K & Suzumura, Kotaro, 1996. "Individual Rights and Social Evaluation: A Conceptual Framework," Oxford Economic Papers, Oxford University Press, vol. 48(2), pages 194-212, April.
    21. Jerry Green & Jean-Jacques Laffont, 1979. "On Coalition Incentive Compatibility," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 46(2), pages 243-254.
    22. Maskin, Eric & Tirole, Jean, 1992. "The Principal-Agent Relationship with an Informed Principal, II: Common Values," Econometrica, Econometric Society, vol. 60(1), pages 1-42, January.
    23. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, April.
    24. Maskin, Eric & Tirole, Jean, 1990. "The Principal-Agent Relationship with an Informed Principal: The Case of Private Values," Econometrica, Econometric Society, vol. 58(2), pages 379-409, March.
    25. Partha Dasgupta & Peter Hammond & Eric Maskin, 1979. "The Implementation of Social Choice Rules: Some General Results on Incentive Compatibility," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 46(2), pages 185-216.
    26. Groves, Theodore, 1973. "Incentives in Teams," Econometrica, Econometric Society, vol. 41(4), pages 617-631, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dilip Mookherjee, 2008. "The 2007 Nobel Memorial Prize in Mechanism Design Theory," Scandinavian Journal of Economics, Wiley Blackwell, vol. 110(2), pages 237-260, June.
    2. Makowski, Louis & Ostroy, Joseph M., 1987. "Vickrey-Clarke-Groves mechanisms and perfect competition," Journal of Economic Theory, Elsevier, vol. 42(2), pages 244-261, August.
    3. Maskin, Eric & Sjostrom, Tomas, 2002. "Implementation theory," Handbook of Social Choice and Welfare, in: K. J. Arrow & A. K. Sen & K. Suzumura (ed.), Handbook of Social Choice and Welfare, edition 1, volume 1, chapter 5, pages 237-288, Elsevier.
    4. Ledyard, John O., "undated". "Public Goods: A Survey of Experimental Research," Working Papers 861, California Institute of Technology, Division of the Humanities and Social Sciences.
    5. Monique Florenzano, 2009. "From equilibrium models to mechanism design: On the place and the role of government in the public goods provision analysis in the second part of the twentieth century," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00367859, HAL.
    6. Monique Florenzano, 2010. "Government and the provision of public goods:from equilibrium models to mechanismdesign," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 17(4), pages 1047-1077.
    7. Isabelle Brocas, 2008. "Optimal choice of characteristics for a nonexcludable good," RAND Journal of Economics, RAND Corporation, vol. 39(1), pages 283-304, March.
    8. Steven R. Williams & R. Radner, 1968. "Informational Externalities and the Scope of Efficient Dominant Strategy Mechanisms," Discussion Papers 761, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    9. Sudhir A. Shah, 2006. "On The Optimal Coordination Of Uninformed Agents By An Informed Principal," Working papers 147, Centre for Development Economics, Delhi School of Economics.
    10. Louis Makowski & Joseph M. Ostroy, 1988. "Groves Mechanisms in Continuum Economies: Characterization and Existence," UCLA Economics Working Papers 518, UCLA Department of Economics.
    11. Maskin, Eric & Sjostrom, Tomas, 2002. "Implementation theory," Handbook of Social Choice and Welfare,in: K. J. Arrow & A. K. Sen & K. Suzumura (ed.), Handbook of Social Choice and Welfare, edition 1, volume 1, chapter 5, pages 237-288 Elsevier.
    12. John O. Ledyard, 1978. "The Allocation of Public Goods with Sealed-Bid Auctions: Some Preliminary Evaluations," Discussion Papers 336, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    13. Clark Robinson & Gerry Suchanek, 1985. "On the design of optimal mechanisms for the Arrow-Hahn-McKenzie economy," Public Choice, Springer, vol. 47(2), pages 313-335, January.
    14. Tian, Guoqiang, 1997. "Virtual implementation in incomplete information environments with infinite alternatives and types," Journal of Mathematical Economics, Elsevier, vol. 28(3), pages 313-339, October.
    15. Makowski, Louis & Ostroy, Joseph M. & Segal, Uzi, 1999. "Efficient Incentive Compatible Economies Are Perfectly Competitive," Journal of Economic Theory, Elsevier, vol. 85(2), pages 169-225, April.
    16. Jon X. Eguia & Dimitrios Xefteris, 2021. "Implementation by Vote-Buying Mechanisms," American Economic Review, American Economic Association, vol. 111(9), pages 2811-2828, September.
    17. Martin Hellwig, 2015. "Financial Stability and Monetary Policy," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2015_10, Max Planck Institute for Research on Collective Goods.
    18. Charles Laine, 1985. "Distribution of jointly owned private goods by the demand-revealing process: Applications to divorce settlements and estate administration," Public Choice, Springer, vol. 47(3), pages 437-457, January.
    19. Drew Fudenberg, 2015. "Tirole's Industrial Regulation and Organization Legacy in Economics," Scandinavian Journal of Economics, Wiley Blackwell, vol. 117(3), pages 771-800, July.
    20. Vitalik Buterin & Zoë Hitzig & E. Glen Weyl, 2019. "A Flexible Design for Funding Public Goods," Management Science, INFORMS, vol. 65(11), pages 5171-5187, November.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kgu:wpaper:12. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Toshihiro Okada (email available below). General contact details of provider: https://edirc.repec.org/data/dekgujp.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.