A solution to the two-person implementation problem

Journal article: We propose strike mechanisms as a solution to the classical problem of Hurwicz and Schmeidler (1978) and Maskin (1999) according to which, in two-person societies, no Pareto efficient rule is Nash-implementable. A strike mechanism specifies the number of alternatives that each player vetoes. Each player simultaneously casts these vetoes and the mechanism selects randomly one alternative among the non-vetoed ones. For strict preferences over alternatives and under a very weak condition for extending preferences over lotteries, these mechanisms are deterministic-in-equilibrium. They Nash implement a class of Pareto efficient social choice rules called Pareto-and-veto rules. Moreover, under mild richness conditions on the domain of preferences over lotteries, any Pareto efficient Nash-implementable rule is a Pareto-and-veto rule and hence is implementable through a strike mechanism.

Author(s)

Jean-François Laslier, Matías Núñez, M. Remzi Sanver

Journal
  • Journal of Economic Theory
Date of publication
  • 2021
Keywords JEL
D71 D72
Keywords
  • Nash implementation
  • Two players
  • Pareto efficiency
Version
  • 1
Volume
  • 194