A new approach to moral hazard is presented. Once local incentive compatibility is satisfied, the problem of verifying global incentive compatibility is shown to be isomorphic to the problem of comparing two classes of distribution functions. Thus, tools from choice under uncertainty can be brought to bear on the problem. The approach allows classic justifications of the first-order approach (F...

Experiments elicit choices from a given set of decision problems. When multiple decision problems are offered in the same experiment, however, behavior in one decision problem may be distorted by the choices made in others. In our terminology, this is a violation of incentive compatibility. We show that, when preferences respect stochastic dominance, the Random Decision Selection (RDS) mechanis...

This Article argues that marriage is an economically efficient institution, designed and evolved to regulate incentive problems that arise between a man and a woman over the life cycle of procreation. As such, its social and legal characteristics will provide a poor match for the incentive problems that arise in the two distinctly different relationships of gay and lesbian couples. Forcing all ...

We consider the problem of coordinating the behavior of multiple self-interested agents. It involves constraint optimization problems that often can only be solved by local search algorithms. Using local search poses problems of incentivecompatibility and individual rationality. We thus define a weaker notion of bounded-rational incentive-compatibility where manipulation is made impossible with...

We consider implementation problems under incomplete information without incentive compatibility. If the social choice functions do not satisfy incentive compatibility, full implementation is unattainable via the existing approaches. By focusing on the actual problems from Typhoon by Joseph Conrad and The Traveler’s Dilemma by Kaushik Basu (1994, 2007), we provide a new approach to such impleme...

We study how to efficiently motivate policy-makers solve political multitask problems. Political problems typically have some outcomes that are difficult measure. Moreover, there conflicts among citizens about optimal policies and the power tax invest in better for tasks. develop a agency model with two tasks only one measurable outcome. In such an environment, choose socially inefficient publi...

II. Examples of Problems Giving Rise to Incentive Compatibility Constraints A. If contributions to the cost of a public good are positively related to willingness to pay, there is an incentive to “free ride.” B. In an exchange economy setting, with agents whose preferences are unknown, there is the possibility of acting as a monopolist or monopsonist. C. In elections with more than two candidat...

This article is devoted to adverse selection problems in which individual private information is a whole utility function and cannot be reduced to some nite-dimensional parameter. In this case, incentive compatibility conditions can be conveniently expressed using some abstract convexity notions arising in Mass Transfer Theory 8]. After this characterization is provided, an existence result of ...

As a consequence of the flexibility mechanisms incorporated in the Kyoto Protocol, incentive-based policies such as emissions trading and the clean development mechanism are being widely discussed in the context of greenhouse gas (GHG) abatement. This paper examines various issues related to incentive-based approaches for India. Some of the specific questions it addresses are: does India stand ...