Efficient investments in the implementation problem

Tomoeda, K

Efficient investments in the implementation problem

Tomoeda, K

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Publication Type:: Journal Article
Citation:: Journal of Economic Theory, 2019, 182 pp. 247 - 278
Issue Date:: 2019-07-01

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Field	Value	Language
dc.contributor.author	Tomoeda, K https://orcid.org/0000-0001-6236-7439	en_US
dc.date.available	2021-05-18T19:01:02Z
dc.date.issued	2019-07-01	en_US
dc.identifier.citation	Journal of Economic Theory, 2019, 182 pp. 247 - 278	en_US
dc.identifier.issn	0022-0531	en_US
dc.identifier.uri	http://hdl.handle.net/10453/133089
dc.description.abstract	© 2019 Elsevier Inc. This paper identifies a condition for an efficient social choice rule to be fully implementable when we take into account investment efficiency. To do so, we extend the standard implementation problem to include endogenous ex ante and ex post investments. In our problem, the social planner aims to achieve efficiency in every equilibrium of a dynamic game in which agents strategically make investments before and after playing the mechanism. Our main theorem shows that a novel condition commitment-proofness is sufficient and necessary for an efficient social choice rule to be implementable in subgame-perfect equilibria. The availability of ex post investments is crucial in our model: there is no social choice rule that is efficient and implementable in subgame-perfect equilibria without ex post investments. We also show that our positive result continues to hold in the incomplete information setting.	en_US
dc.relation.ispartof	Journal of Economic Theory	en_US
dc.relation.isbasedon	10.1016/j.jet.2019.04.009	en_US
dc.rights	info:eu-repo/semantics/embargoedAccess
dc.subject.classification	Economic Theory	en_US
dc.title	Efficient investments in the implementation problem	en_US
dc.type	Journal Article
utslib.citation.volume	182	en_US
utslib.for	1401 Economic Theory	en_US
utslib.for	1499 Other Economics	en_US
pubs.embargo.period	Not known	en_US
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Economics Discipline
utslib.copyright.status	open_access	*
pubs.publication-status	Published	en_US
pubs.volume	182	en_US

Abstract:

© 2019 Elsevier Inc. This paper identifies a condition for an efficient social choice rule to be fully implementable when we take into account investment efficiency. To do so, we extend the standard implementation problem to include endogenous ex ante and ex post investments. In our problem, the social planner aims to achieve efficiency in every equilibrium of a dynamic game in which agents strategically make investments before and after playing the mechanism. Our main theorem shows that a novel condition commitment-proofness is sufficient and necessary for an efficient social choice rule to be implementable in subgame-perfect equilibria. The availability of ex post investments is crucial in our model: there is no social choice rule that is efficient and implementable in subgame-perfect equilibria without ex post investments. We also show that our positive result continues to hold in the incomplete information setting.

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http://hdl.handle.net/10453/133089