If A is a set of social alternatives, a social choice rule (SCR) assigns a subset of A to each potential profile of individuals' preferences over A, where the subset is interpreted as the set of "welfare optima" A game form (or "mechanism") implements the social choice rule if, for any potential profile of preferences, (i) any welfare optimum can arise as a Nash equilibrium of the game form (implying, in particular, that a Nash equilibrium exists) and, (ii) all Nash equilibria are welfare optimal. The main result of this paper establishes that any SCR that satisfies two properties—monotonicity and no veto power—can be implemented by a game form if there are three or more individuals. The proof is constructive.

We first point out that the recent property-rights literature is based on three assumptions: (1) that contracts are always subject to renegotiation; (2) that the exercise of a property right confers a private benefit and (3) that parties are risk-neutral. Building on Hart-Moore (1999), we provide conditions under which an optimal contract consists of nothing more than an assignment of property rights. We also examine the robustness of some of the literature's standard predictions about asset ownership to the introduction of mechanisms for eliciting parties' ex post willingness to pay for the assets (such as options or financial markets). To illustrate the issue, we revisit the Hart-Moore (1990) proposition that joint ownership is suboptimal, and argue that ownership by a single party is dominated by joint ownership with put options.

The paper characterizes the choice rules that can be implemented when agents are unable to commit themselves not to renegotiate the mechanism.

We scrutinize the conceptual framework commonly used in the incomplete contract literature. This literature usually assumes that contractual incompleteness is due to the transaction costs of describing—or of even foreseeing—the possible states of nature in advance. We argue, however, that such transaction costs need not interfere with optimal contracting (i.e. transaction costs need not be relevant), provided that agents can probabilistically forecast their possible future payoffs (even if other aspects of the state of the nature cannot be forecast). In other words, all that is required for optimality is that agents be able to perform dynamic programming, an assumption always invoked by the incomplete contract literature. The foregoing optimality result holds very generally provided that parties can commit themselves not to renegotiate. Moreover, we point out that renegotiation may be hard to reconcile with a framework that otherwise presumes perfect rationality. However, even if renegotiation is allowed, the result still remains valid provided that parties are risk averse.

Partha Dasgupta, Eric Maskin; The Existence of Equilibrium in Discontinuous Economic Games, II: Applications, The Review of Economic Studies, Volume 53, Is

Partha Dasgupta, Eric Maskin; The Existence of Equilibrium in Discontinuous Economic Games, I: Theory, The Review of Economic Studies, Volume 53, Issue 1, 1 Jan

This paper provides a systematic study of planning procedures with public goods in which local truthful revelation of preferences is a dominant strategy. These procedures are said to be strongly locally individually incentive compatible (SLIIC). We first characterize the (time invariant) continuously differentiable planning procedures that are SLIIC. Then, we study properties such as balancedness, cheatproofness with respect to coalitions, neutrality, individual rationality and we point out the connection with the MDP procedures.

We model an organization as a hierarchy of managers erected on top of a technology (here consisting of a collection of plants). In our framework, the role of a manager is to take steps to reduce the adverse consequences of shocks that affect the plants beneath him. We argue that different organizational forms give rise to different information about managers' performance and therefore differ according to how effective incentives can be in encouraging a good performance. In particular, we show that, under certain assumptions, the M-form (multi-divisional form) is likely to provide better incentives than the U-form (unitary form) because it promotes yardstick competition (i.e. relative performance evaluation) more effectively. We conclude by presenting evidence that the assumptions on which this comparison rests are satisfied for Chinese data.

The revenue-equivalence theorem 1 for auctions predicts that expected seller revenue is independent of the bidding rules, as long as equilibrium has the properties that the buyer with the highest reservation price wins and any buyer with the lowest possible reservation price has zero expected surplus. Thus, in particular, the two most common auction institutions- the open "English " auction and the sealed high-bid auction- are equivalent despite their rather different strategic properties. This strong prediction of equivalence seems at odds, however, with the empirical observation that rarely is any given kind of commodity sold through more than one sort of auction. Thus, for example, art is nearly always auctioned off according to the English rules, whereas job contracts are normally awarded through sealed bids. Admittedly, in the public sector, there have been a few attempts to use both methods (lumber contracts in the Pacific Northwest) or to switch from one to the other (Treasury Bills). But changes have typically met great resistance. This is also in conflict with theory, since a corollary of the revenue equivalence theorem is that the expected surplus for any buyer is the same in the two auctions.

Eric Maskin, John Riley; Equilibrium in Sealed High Bid Auctions, The Review of Economic Studies, Volume 67, Issue 3, 1 July 2000, Pages 439–454, https://d