Technical Report Partially-honest Nash Implementation with Non-connected Honesty Standards

Lombardi, Michele  ,  Yoshihara, Naoki

2016-02 , Institute of Economic Research, Hitotsubashi University
An individual may display an honesty standard which allows her to lie a little without that being harmful to her self view as an honest person. On this basis, the paper considers a society with a finite number of individuals involving partially-honest individuals and in which every individual has her own honesty standard. An individual honesty standard is modeled as a subgroup of the society, including the individual herself. A partially-honest individual is an individual who strictly prefers to tell the truth prescribed by her honesty standard whenever lying has no effect on her material well-being. The paper studies the impact of placing honesty standard restrictions on the mechanism designer for Nash implementation problems of that society. It offers a necessary condition for Nash implementation, called partial-honesty monotonicity, and shows that in an independent domain of preferences that condition is equivalent to Maskin monotonicity, provided that honesty standards of society are non-connected. They are non-connected if every individual is excluded from the honesty standard of another individual. Finally, it shows that the limitations imposed by Maskin monotonicity can be circumvented by a q-mechanism (Lombardi and Yoshihara, 2013) provided that there are at least n - q + 1 partially-honest individuals in a society and that no participant has a veto-power.

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