Efficient incentives with social preferences

Thomas Daske, Christoph March

We explore mechanism design with outcome-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 \textit{at least three} agents: 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.

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Year of publication:	2024
Authors:	Daske, Thomas ; March, Christoph
Published in:	Theoretical economics : TE ; an open access journal in economic theory. - Toronto : [Verlag nicht ermittelbar], ISSN 1555-7561, ZDB-ID 2220447-7. - Vol. 19.2024, 3, p. 975-999
Subject:	Mechanism design \| social preferences \| Bayesian implementation \| participation constraints \| participation stimulation \| money pump \| Soziale Wohlfahrtsfunktion \| Social welfare function \| Mechanismus-Design-Theorie \| Präferenztheorie \| Theory of preferences \| Spieltheorie \| Game theory \| Anreiz \| Incentives \| Neue politische Ökonomie \| Public choice \| Experiment \| Öffentliche Güter \| Public goods