Publisher:
Bamberg Economic Research Group, Bamberg University, Bamberg
This study explores mechanism design with allocation-based social preferences. Agents’ social preferences and private payoffs are all subject to asymmetric information. We assume quasi-linear utility and independent types. We show how the asymmetry...
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ZBW - Leibniz-Informationszentrum Wirtschaft, Standort Kiel
Signature:
DS 19
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This study explores mechanism design with allocation-based social preferences. Agents’ social preferences and private payoffs are all subject to asymmetric information. We assume quasi-linear utility and independent types. We show how the asymmetry of information about agents’ social preferences can be operationalized to satisfy agents’ participation constraints. Our main result is a possibility result for groups of at least three agents: If endowments are sufficiently large, any such group can resolve any given allocation problem with an ex-post budget-balanced mechanism that is Bayesian incentive-compatible, interim individually rational, and ex-post Pareto-efficient.
