Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/77586
Authors: 
Bierbrauer, Felix
Netzer, Nick
Year of Publication: 
2012
Series/Report no.: 
Working Paper Series, Department of Economics, University of Zurich 66
Abstract: 
We introduce intention-based social preferences into a Bayesian mechanism design framework. We first show that, under common knowledge of social preferences, any tension between material efficiency, incentive compatibility, and voluntary participation can be resolved. Hence, famous impossibility results such as the one by Myerson and Satterthwaite (1983) are turned into possibility results. Second, we provide a systematic account of the welfare implications of kindness sensations. Finally, we turn to an environment without common knowledge of social preferences and introduce the notion of a psychologically robust mechanism. Such a mechanism can be implemented without information about the type or the intensity of social preferences. We show that the mechanisms which have been the focus of the conventional mechanism design literature can be modified to achieve psychological robustness.
Subjects: 
Mechanism Design
Psychological Games
Social Preferences
Intentions
Reciprocity
Revelation Principle
JEL: 
C70
C72
D02
D03
D82
D86
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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