Top-Pair and Top-Triple Monotonicity

We say that a social choice function (SCF) satisfies Top-k Monotonicity if the following holds. Suppose the outcome of the SCF at a preference profile is one of the top k-ranked alternatives for voter i. Let the set of these k alternatives be denoted by B. Suppose that i’s preference ordering changes in such a way that the set of first k-ranked alternatives remains the set B. Then the outcome at the new profile must belong to B. This definition of monotonicity arises naturally from considerations of set “improvements” and is weaker than the axioms of strong positive association and Maskin Monotonicity. Our main results are that if there are two voters then a SCF satisfies unanimity and Top-2 or Top-pair Monotonicity if and only if it is dictatorial. If there are more than two voters, then Top-pair Monotonicity must be replaced by Top-3 Monotonicity (or Top-triple Monotonicity) for the analogous result. Our results demonstrate that connection between dictatorship and “improvement” axioms is stronger than that suggested by the Muller–Satterthwaite result (Muller and Satterthwaite in J Econ Theory 14:412–418, 1977) and the Gibbard–Sattherthwaite theorem.     

No externalities: a characterization of efficiency and incentive compatibility with public goods

We show that efficient anonymous incentive compatible (dominant strategy) mechanisms for public goods eliminate externalities, i.e., each individual is unable to change the welfare of anyone else. The characterization is used to derive existence and non-existence results for models with a finite number of individuals and to explain existence results in the continuum. A similar characterization and conclusions are demonstrated for private goods in (J Econ Theory 85:169–225, 1999). However, unlike private goods, elimination of externalities with public goods implies that individuals cannot change the outcome. Hence, such mechanisms provide only weak incentives for truth-telling.     

Production efficiency and constraints on profit taxation and profit distribution in economies with Ramsey taxation

In economies with Ramsey taxation, decreasing returns to scale, and private ownership, we show that second-best production efficiency is desirable when the grouping of private firms induced by the profit taxation power of the government is at least as fine as the grouping of firms induced by the institutional rules of profit distribution in the economy. The classic results of Dasgupta and Stiglitz (Rev Econ Stud 39:87–103, 1972) (of firm-specific profit taxation) and Diamond and Mirrlees (Am Econ Rev 61:8–27, 1971a; Am Econ Rev 61:261–278, 1971b) and Guesnerie (A contribution to the pure theory of taxation, 1995) (of uniform 100 % profit taxation) follow as special cases of our model. Moreover, second-best analysis shows that optimal profit taxation is a substitute for optimal intermediate input taxation. In smooth economies, proportional, lump-sum, and affine modes of profit taxation are equivalent. We rework Mirrlees (Rev Econ Stud 39:105–111, 1972) counterexample, which is posed in the context of a non-smooth economy, to show that second-best production efficiency continues to remain desirable under an affine structure of profit taxation.     

Expected fair allocation in farsighted network formation

I consider situations in which a group of players extracts a value if they organise themselves in different network structures, and I define a solution concept to describe the decentralised decision that determines the network formation process and the allocation of the value. I demonstrate that there is a solution concept satisfying discounted expected versions of pairwise stability (Jackson and Wolinsky J Econ Theory 71:44–74, 1996) and fairness (Myerson Math Oper Res 2:225–229, 1977a) jointly with the requirement that the allocation rule be component efficient if the players’ discount factor is sufficiently low.     

Nash Implementation with Lottery Mechanisms

Consider the problem of exact Nash Implementation of social choice correspondences. Define a lottery mechanism as a mechanism in which the planner can randomize on alternatives out of equilibrium while pure alternatives are always chosen in equilibrium. When preferences over alternatives are strict, we show that Maskin monotonicity (Maskin in Rev Econ stud 66: 23–38, 1999) is both necessary and sufficient for a social choice correspondence to be Nash implementable. We discuss how to relax the assumption of strict preferences. Next, we examine social choice correspondences with private components. Finally, we apply our method to the issue of voluntary implementation (Jackon and Palfrey in J Econ Theory 98: 1–25, 2001).I thank Toyo Sakai for his comments on a previous draft. I also thank two anonymous referees and an editor of this journal for helpful comments that improved this paper. A previous version circulated as “A note on Maskin monotonicity”. After the results presented here were obtained, I became aware of a new unpublished paper by Benoit and Ok (2004). The result of Theorem 2 and the discussion that follows is partially similar to their Theorem 1.     

Generalized average rules as stable Nash mechanisms to implement generalized median rules

We consider a problem in which a policy is chosen from a one-dimensional set over which voters have single-peaked preferences. While Moulin (Public Choice 35:437–455, 1980) and others subsequent works have focused on strategy-proof rules, Renault and Trannoy (Mimeo 2011) and Renault and Trannoy (J Pub Econ Theory 7:169–199, 2005) have shown that the average rule implements a generalized median rule in Nash equilibria and provide an interpretation of the parameters in Moulin’s rule. In this article, we first extend their result by showing that a wide range of voting rules which includes the average rule can implement Moulin’s rule in Nash equilibria. Moreover, we show additionally that within this class, generalized average rules are Cournot stable. That is, from any strategy profile, any best response path must converge to a Nash equilibrium.     

Modeling resource flow asymmetries using condensation networks

This paper examines strict Nash networks in the noncooperative directed flow model of Bala and Goyal (Econometrica 68(5):1181–1230, 2000) with partner heterogeneity (payoff of a player in a link depends on the identity of her link partner). We focus on the asymmetries with regard to the resources obtained by players. Using the notion of condensation networks, we partition the population into groups of players who obtain the same resources and order these groups according to the resources they obtain. We show that the partner heterogeneity assumption impacts the strict Nash networks asymmetries in a different way than Galeotti (Econ Theory 29(1):163–179, 2006) player heterogeneity assumption (the payoff of a player in a link depends on her own identity).     

Propositionwise judgment aggregation: the general case

In the theory of judgment aggregation, it is known for which agendas of propositions it is possible to aggregate individual judgments into collective ones in accordance with the Arrow-inspired requirements of universal domain, collective rationality, unanimity preservation, non-dictatorship and propositionwise independence. But it is only partially known (e.g., only in the monotonic case) for which agendas it is possible to respect additional requirements, notably non-oligarchy, anonymity, no individual veto power, or extended unanimity preservation. We fully characterize the agendas for which there are such possibilities, thereby answering the most salient open questions about propositionwise judgment aggregation. Our results build on earlier results by Nehring and Puppe (Strategy-proof social choice on single-peaked domains: possibility, impossibility and the space between, 2002), Nehring (Oligarchies in judgment aggregation: a characterization, 2006), Dietrich and List (Soc Choice Welf 29(1):19–33, 2007a) and Dokow and Holzman (J Econ Theory 145(2):495–511, 2010a).     

Monotonicity implies generalized strategy-proofness for correspondences

We show that Maskin monotone social choice correspondences on sufficiently rich domains satisfy a generalized strategy-proofness property, thus generalizing Muller and Satterthwaite’s (1977) theorem to correspondences. The result is interpreted as a possibility theorem on the dominant-strategy implementability of monotone SCCs via set-valued mechanisms for agents who are completely ignorant about the finally selected outcome. Alternatively, the result yields a partial characterization of the restrictions entailed by Nash implementability of correspondences. Received: 3 November 1997/Accepted: 26 April 1999     

A new approach for bounding awards in bankruptcy problems

The solution for the contested garment problem, proposed in the Babylonic Talmud, suggests that each agent should receive at least some part of the resources whenever the claim exceeds the available amount. In this context, we propose a new method to define lower bounds on awards, an idea that has underlied the theoretical analysis of bankruptcy problems from its beginning (O’Neill, Math Soc Sci 2:345–371, 1982) to present day (Dominguez and Thomson, Econ Theory 28:283–307, 2006). Specifically, starting from the fact that a society establishes its own set of commonly accepted equity principles, our proposal ensures to each agent the smallest amount she gets according to all the admissible rules. We analyze its recursive application for different sets of equity principles.     

Assessment of the distributive impact of national trade reforms in Brazil

This paper quantifies the distributional and poverty effects of trade liberalization in Brazil using household survey data. We estimate the consumption and labor impact of Mercosur trade reform following the methodology suggested by Porto (J Int Econ 70:140–160, 2006) and Nicita (J Dev Econ 89(1):19–27, 2009). Results show that trade liberalization had a pro-poor effect in Brazil. This result is largely explained by two major observations: the fact that consumption good prices decreased after Brazil entered Mercosur and a close to zero labor income effect. We find that poverty decreased after national trade liberalization (both for women and men). Additionally, we obtained no significant inequality effects after national trade reforms.     

Note on social choice allocation in exchange economies with Cobb–Douglas preferences

We show that in a pure exchange economy with two agents and a finite number of goods, there exists no strategy-proof, Pareto-efficient, and non-dictatorial social choice allocation function on any local Cobb–Douglas preference domain. This is a slight extension of a result proved by Hashimoto (2008).     

On the characterization of liberalism by Samet and Schmeidler

In the model of group identification, Samet and Schmeidler (J Econ Theory 110:213–233, 2003) provide two axiomatic characterizations of the“liberal” decision rule (a person is socially qualified as a member of a collective if and only if he qualifies himself). They impose standard monotonicity, non-degeneracy, and independence axioms, together with either exclusive self-determination (opinions by disqualified persons about qualified persons should not matter) or affirmative self-determination (social decision on who are qualified should coincide with social decision on who should be the qualifiers). Dropping monotonicity (and also non-degeneracy in a result) and considering a more general domain to allow neutral opinions, we characterize a larger family of “self-dependent” rules that share the important feature of liberalism that qualification of i depends only on i’s own opinion about himself or herself. Samet and Schmeidler’s results can be obtained with a weaker set of axioms and with a more general domain condition.     

Bayesian implementation with partially honest individuals

We apply the idea of partial honesty, first introduced by Dutta and Sen (Game Econ Behav 74:154–169, 2012) in a complete information setting, to environments with incomplete information. We show that with private values and at least three individuals, incentive compatibility and no veto power are together sufficient for full implementation without any further restrictions if all individuals are partially honest. With common values, however, an additional assumption called private best alternatives is needed. This condition holds, for example, in most standard resource allocation problems     

A voluntary participation game through a unit-by-unit cost share mechanism of a non-excludable public good

The strategic analysis of voluntary participation in the public good provision has shown two distinct results. First, when the provision of public goods is binary, there are Nash equilibria supporting efficient allocations, and these are Strong Nash equilibria of the game. On the other hand, a model of a continuous public good (Saijo–Yamato, J Econ Theory 84:227–242, 1999) showed that the participation of all agents is not an equilibrium in many situations. This article considers the provision of a discrete and multi-unit public good, and examines a unit-by-unit participation game. Namely, people are asked to participate in each unit of public good provision, and those who chose to participate share the marginal cost of public good. In this game of public good provision, there are subgame-perfect equilibria that are Pareto efficient. We also use the refinement concepts to eliminate inefficient subgame-perfect equilibria and also to characterize the efficient subgame-perfect equilibria.     

Maximal domain for strategy-proof probabilistic rules in economies with one public good

We consider the problem of choosing a level of a public good on an interval of the real line among a group of agents. A probabilistic rule chooses a probability distribution over the interval for each preference profile. We investigate strategy-proof probabilistic rules in the case where distributions are compared based on stochastic dominance relations. First, on a “minimally rich domain”, we characterize the so-called probabilistic generalized median rules (Ehlers et al., J Econ Theory 105:408–434, 2002) by means of stochastic-dominance (sd) strategy-proofness and ontoness. Next, we study how much we can enlarge a domain to allow for the existence of sd-strategy-proof probabilistic rules that satisfy ontoness and the no-vetoer condition. We establish that the domain of “convex” preferences is the unique maximal domain including a minimally rich domain for these properties.     

On credible coalitional deviations by prudent players

In this paper we first explore the predictive power of the solution notion called conservative stable standard of behaviour (CSSB), introduced by Greenberg (The theory of social situations, 1990), in environments with farsighted players (as modelled in Xue, Econ Theory 11:603–627, 1998) as intuitively it is quite nice. Unfortunately, we find that CSSB has a number of undesirable properties: most importantly, it makes vacuous predictions for most natural social environments. Therefore, we introduce an intuitive refinement of this solution which we call conservative stable weak predictor. In settings of proper voting games, we explore some existence properties of this new solution and also show that it may not be unique. However, unfortunately, this refinement may also lead to non-intuitive vacuous predictions.     

The Opportunities for Adopting Inflation Targeting in Tunisia: a Cointegration Study and Transmission Channels of Monetary Policy

The major aim of this paper is to analyze, at a first stage, the trend of inflation in Tunisia, then to conduct an overview of inflation measures and, to develop a simple inflation forecasting by applying the Box and Jenkins (Time series analysis: forecasting and control. Holden day, San Francisco, 1976) method. It is essential to understand the dynamics of the core and global inflation, and to explore the relationships that may undermine cointegration inflation via the Engle and Granger (Econometrica 55:251–276, 1987) and Johansen (J Econ Dyn Control 12:231–254, 1988) methods on control variables during a recent monthly period, ranging from 1996 to 2006. Concerning the Tunisian case, and by retracing the similar study conducted by Ndiyae and Badji (Les déterminants de l’inflation au Sénégal: Approche par les fonctions de consommations, Agence nationale de la statistique et de la méthodologie, 2008), the results have shown the existence of just a single cointegration relationship between the variables concerning a short term and long-term dynamics. Moreover, within the same spirit, a structural analysis based on structural VAR of Blanchard and Quah (Am Econ Rev 79:655–673, 1989) method has managed to identify the shocks impact on the supply and demand variables on the consumer prices index through the study of transmission channels of monetary policy. The outcomes have exposed that the relatively low impact degree of control variables on inflation in Tunisia is consistent with those carried out by Gupta and Komen (Time aggregation and the contradictions with causal relationships: can economic theory come to the rescue? 2008).     

Collective labor supply with many consumption goods

We extend Chiappori??s (J Polit Econ 100:437?C467, 1992) standard, ??collective?? model of labor supply to the case of several consumption goods. We show that more robust estimates obtain. Moreover, individual demands for each commodity, although unobservable, can be recovered up to an additive constant. In particular, the impact of changes in wages, non labor income or distribution factors on individual consumption patterns can be identified even though no individual consumption is observed.     

Monotonicity properties and their adaptation to irresolute social choice rules

What is a monotonicity property? How should such a property be recast, so as to apply to voting rules that allow ties in the outcome? Our original interest was in the second question, as applied to six related properties for voting rules: monotonicity, participation, one-way monotonicity, half-way monotonicity, Maskin monotonicity, and strategy-proofness. This question has been considered for some of these properties: by Peleg and Barberà for monotonicity, by Moulin and Pérez et?al, for participation, and by many authors for strategy-proofness. Our approach, however, is comparative; we examine the behavior of all six properties, under three general methods for handling ties: applying a set extension principle (in particular, G?rdenfors’ sure-thing principle), using a tie-breaking agenda to break ties, and rephrasing properties via the “t-a-t” approach, so that only two alternatives are considered at a time. In attempting to explain the patterns of similarities and differences we discovered, we found ourselves obliged to confront the issue of what it is, exactly, that identifies these properties as a class. We propose a distinction between two such classes: the “tame” monotonicity properties (which include participation, half-way monotonicity, and strategy proofness) and the strictly broader class of “normal” monotonicity properties (which include monotonicity and one-way monotonicity, but not Maskin monotonicity). We explain why the tie-breaking agenda, t-a-t, and G?rdenfors methods are equivalent for tame monotonicities, and how, for properties that are normal but not tame, set-extension methods can fail to be equivalent to the other two (and may fail to make sense at all).