The theory of implementation of socially optimal decisions in economics

Since the early seventies, following the pioneering work by Leo Hurwicz, economists have been studying the relationship between socially optimal goals and private self-interest. The task was to reconcile the Utopian and Hobbesian traditions, using game theory to find ways to organise the society that are both socially optimal and incentive compatible. This book provides a succinct and up-to-date account of this vast literature and will be welcomed by students, lecturers and anyone wishing to update their knowledge of the field.

Cover -- Contents -- Introduction -- 1 Economies with Public Goods -- 1.1 Introduction -- 1.2 Efficiency and public goods -- 1.3 The Core and public goods -- 1.4 Lindahl's equilibrium -- 1.5 Kaneko's ratio equilibrium -- 1.6 Mas-Colell and Silvestre's cost-share equilibrium -- 1.7 A criticism of the notions of equilibrium with an auctioneer -- 1.8 Exercises -- 1.9 References -- 2 Resource Allocation Mechanisms -- 2.1 Introduction -- 2.2 An example of resource allocation: the case of Adam and Eve -- 2.3 Description of the economic environment -- 2.4 Social objectives and incentives -- 2.5 Mechanisms -- 2.6 Strategic aspects -- 2.7 The problem of design -- 2.8 Summary -- 2.9 Exercises -- 2.10 References -- 3 Dominant Strategies and Direct Mechanisms -- 3.1 Introduction -- 3.2 The revelation principle -- 3.3 The impossibility of truthful implementation in economic environments (I) -- 3.4 The impossibility of truthful implementation in economic environments (II) -- 3.5 The manipulation of the initial endowments -- 3.6 Conclusion -- 3.7 Exercises -- 3.8 References -- 4 Implementation in Nash Equilibrium (I): General Results -- 4.1 Introduction -- 4.2 Characterization of social choice correspondences implementable in Nash equilibrium -- 4.3· Implementation in Nash equilibrium in economic environments -- 4.4. Implementation when the feasible set is unknown and credible implementation -- 4.5 Exercises -- 4.6 References -- Appendix: the King Solomon problem -- 5 Implementation in Nash Equilibrium (II): Applications -- 5.1 Introduction -- 5.2. Implementing the Lindahl and the Walras correspondences by means of abstract mechanisms -- 5.3 Doubly implementing the ratio and the Walras correspondences by means of market mechanisms -- 5.4 Implementation of solutions to the problem of fair division -- 5.5 Exercises -- 5.6 References.