Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5101818 | Journal of Public Economics | 2017 | 22 Pages |
Abstract
We study two classic challenges in mechanism design - bilateral trade à la Myerson and Satterthwaite (1983) and redistributive income taxation à la Mirrlees (1971) and Piketty (1993) - to show that some standard mechanism design solutions systematically fail with social preferences. We therefore introduce the notion of a social-preference-robust mechanism which works not only for selfish but also for social preferences of different nature and intensity, and characterize the optimal mechanism for this class. With the help of a series of laboratory experiments we find that behavior can indeed be better controlled with social-preference-robust mechanisms.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Felix Bierbrauer, Axel Ockenfels, Andreas Pollak, Désirée Rückert,