efficient mechanisms for bilateral trading we consider bargaining problems between one buyer and one seller for a single object the seller s valuation and the buyer s valuation for the object are assumed to be independent random variables and each individual s valuation is unknown to the other we characterize the set of allocation mechanisms that are bayesian incentive compatible and individually rational and show the general impossibility of ex post efficient mechanisms without outside subsidies for a wide class of problems we show how to compute mechanisms that maximize expected total gains from trade and mechanisms that can maximize a broker s expected profit journal of economic literature classification number 026

robust trading mechanisms we consider the problem of designing a trading institution for a single buyer and seller when their valuation of the good is private information it is shown that posted price mechanisms are essentially the only mechanisms such that each trader has a dominant strategy a posted price mechanism is one where a price is posted in advance and trade occurs if and only if all traders agree to trade

simple mechanisms and preferences for honesty we consider full implementation in complete information environments when agents have an arbitrarily small preference for honesty we offer a condition called separable punishment and show that when it holds and there are at least two agents any social choice function can be implemented by a simple mechanism in two rounds of iterated deletion of strictly dominated strategies

mechanism design with incomplete information a solution to the implementation problem the main result of this paper is that the multiple equilibrium problem in mechanism design can be avoided in private value models if agents do not use weakly dominated strategies in equilibrium we show that in such settings any incentive compatible allocation can be made the unique equilibrium outcome to a mechanism we derive a general necessary condition for unique implementation which implies that the positive result for private value models applies with considerably less generality to common value settings and to situations in which an agent s information does not index the agent s preferences

education development and wage inequality the case of taiwan abstract this article uses a multiple stage theil decomposition to examine the contribution of five development processes to wage inequality in taiwan increases in educational attainment the expansion of skill intensive industries factor specific technical change population aging and the entry of women into the labor force since the supply of skill tends to remain constant within cohorts the theil decomposition is useful in separating the effects of supply and demand related factors on the wage structure increases in educational attainment tended to reduce inequality in the 1980s but factor specific technical change increased inequality in the 1990s

soil conservation as an investment in land abstract most studies on the problem of optimal soil conservation have analyzed soil conservation measures as being time limited in their effect this paper extends previous analyses of the soil conservation decision by allowing farmers to make investments in soil conservation structures such as terraces bundles and ditches it shows that the main conclusions arrived at in previous studies remain valid the long term effects of unanticipated permanent changes in prices and discount rates may go either way independent of whether conservation measures are time limited or have lasting effects on the soil base

an economic model of soil conservation by introducing soil depth and soil loss into a simple model of agricultural production this paper seeks to determine when the private path of erosion differs from the socially optimal path considering the depletion of soil only and abstracting from the environmental disruption caused by erosion the paper argues that under most institutional arrangements the social and private rates of erosion are the same the paper concludes that public policy should be directed toward reducing erosion only when it leads to significant pollution externalities

implementing just and efficient decision making in an economy with one public good one private good and quasi linear utilities we explore decision making mechanisms to non cooperatively implement an efficient outcome by auctioning the leadership role among agents one implements egalitarianism namely the efficient outcome that distributes equally the surplus available from an a priori given status quo a refinement of this mechanism so called autioning the leadership with differentiated buds allows us to implement an efficient anonymous and neutral outcome it achieves egalitarianism above the vickrey clarke groves decision

undominated nash implementation with collusion and renegotiation abstract this article looks at implementation in economic environments when agents have perfect information about the state of the world but cannot commit not to renegotiate bad outcomes or to collude against each other if renegotiation satisfies a weak condition of disagreement point monotonicity then any pareto efficient social choice function can be implemented if there are at least three agents who play undominated nash equilibria the mechanism does not use modulo or integer games has no bad mixed strategy equilibria and is bounded journal of economic literature classification number d71

environmental externalities in traditional agriculture and the impact of trade liberalization the case of ghana abstract this paper provides a framework for the evaluation of trade policies that explicitly considers the effects of such policies on the environmental resources biomass in doing this we estimate the effects of biomass as a factor of agricultural production and test the hypothesis that farmers efficiently exploit biomass a resource held in common property the main findings are i biomass is an important factor of production in ghanian agriculture ii the biomass resource is exploited beyond the socially optimal level iii a deepening of trade liberalization is likely to induce further losses of biomass and deforestation and iv national income is likely to fall in response to further trade liberalization

multidimensional incentive compatibility and mechanism design abstract incentive compatibility conditions are characterized in general for problems in which several goods are to be allocated and agents types are multidimensional two questions of monopoly pricing under multidimensional uncertainty are then analyzed first we find the optimal nonlinear pricing scheme when the monopolist knows only the distribution of an arbitrarily parameterized family of demand curves and second we solve for the optimal bundling policy for a multiproduct monopolist

efficiency and voluntary implementation in markets with repeated pairwise bargaining we examine a simple bargaining setting where heterogeneous buyers and sellers are repeatedly matched with each other we begin by characterizing efficiency in such a dynamic setting and discuss how it differs from efficiency in a centralized static setting we then study the allocations which can result in equilibrium when the matched buyers and sellers bargain through some extensive game form we take an implementation approach characterizing the possible allocation rules which result as the extensive game form is varied we are particularly concerned with the impact of making trade voluntary imposing individual rationality on and off the equilibrium path no buyer or seller consummates an agreement which leaves them worse off than the discounted expected value of their future rematching in the market finally we compare and contrast the efficient allocations with those that could ever arise as the equilibria of some voluntary negotiation procedure

agricultural development with rainforest conservation methods for seeking best bet alternatives to slash and burn with applications to brazil and indonesia abstract forests continue to fall for agricultural purposes throughout the humid tropics with immediate and potentially large consequences for climate change and biodiversity loss issues of key interest to the international community some of the actors directly responsible for forest conversion fell trees to meet food security needs and alleviate poverty issues of urgent interest to them and also to national policymakers this multiplicity of groups with differing often conflicting interests in the multifarious goods and services produced by tropical forests complicates the search for alternative agricultural activities for forest margins since these alternatives must satisfy such divergent objectives this paper sets out a conceptual framework for comparing the impacts of different land use systems and agricultural practices at the margins of tropical rainforests in terms of the concerns and objectives of two key interest groups small scale farmers seeking livelihoods at the forest margins and the international interests in the global public goods and services supplied by tropical rainforests this framework should be useful to a third key group the national and regional policymakers who must consider these and other policy objectives and then decide on courses of action the paper identifies data needs and analytical methods capable of supplying an empirical base for this conceptual framework based on quantifiable indicators it then presents preliminary results of the application of this conceptual framework in indonesia and brazil in association with a global collaborative multidisciplinary research program even using preliminary order of magnitude estimates to be replaced by more precise measurements as they become available this conceptual framework presents results in ways that allow researchers and policymakers to select clear best bets for development when they exist and to assess tradeoffs and options for complementary policy action and research efforts when they do not

incentive mechanism design for production economies with both private and public ownerships in this paper we dealwith the probl em of incentive mechanism design which yields efficient allocations for general mixed ownership economies when preferences individual endowments and coalition patterns among individuals are unknown to the planner we do so by doubly implementing the proportional solution for economies with any number of private sector and public sector commodities and any number of individuals as well as the coexistence of privately and publicly owned firms with general convex production possibility sets furthermore the mechanisms work not only for three or more agents but also for two agent economies journal of economic literature classification numbers c72 d61 d71 d82 2000 academic press

undominated nash implementation in bounded mechanisms we study implementation in undominated nash equilibrium by bounded mechanisms an undominated nash equilibrium is a nash equilibrium in which no agent uses a weakly dominated strategy a mechanism is bounded if every dominated strategy is dominated by some undominated strategy we identify necessary conditions and sufficient conditions for such implementation these conditions are satisfied in virtually all economic environments and are also satisfied by interesting correspondences from the social choice literature for economic settings we provide a particularly simple implementing mechanism for which the undominated equilibrium outcomes coincide with those obtained from the iterative elimination of weakly dominated strategies

knightian analysis of the vickrey mechanism we analyze the vickrey mechanism for auctions of multiple identical goods when the players have both knightian uncertainty over their own valuations and incomplete preferences in this model the vickrey mechanism is no longer dominant strategy and we prove that all dominant strategy mechanisms are inadequate however we also prove that in undominated strategies the social welfare produced by the vickrey mechanism in the worst case is not only very good but also essentially optimal

population growth soil fertility and agricultural intensification abstract this paper presents a renewable resource model of soil fertility with a nonconvexity in the net benefit function in this setting recurring cycles of cropping and fallow can be the optimal soil management strategy the model is used to illuminate the boserup discussion of agricultural development in which population growth leads to agricultural intensification defined as an increase in cropping frequency previous formal models of the boserup hypothesis focus on the land labor ratio rather than cropping frequency and have not directly incorporated soil fertility dynamics these models assume a convex production technology and are not optimistic about the prospect for agricultural development without technological progress this paper explicitly models soil fertility dynamics and demonstrates that nonconvexities in the production technology are an important feature of the use of long fallow periods for soil management as population grows and the demand for food increases the importance of the nonconvexity diminishes and more frequent cropping becomes economical given a nonconvexity in the production technology it is possible though not necessary that average labor productivity increases with agricultural intensification thus it is possible to reconcile the greater labor requirement of intensive farming with an increase in average labor productivity in addition boserup argued that a larger and denser population facilitates the development of economic and social infrastructures which improve agricultural productivity

agricultural expansion and deforestation modelling the impact of population market forces and property rights abstract this paper compares four different modelling approaches to agricultural expansion and deforestation and explores the implications of assumptions about the household objectives the labour market and the property rights regime a major distinction is made between population and market based explanations many of the popular policy prescriptions are based on the population approach assuming subsistence behaviour and limited market integration within a more realistic particularly for the long term effects market approach well intentioned policies such as agricultural intensification programmes may boost deforestation many forest frontier contexts are also characterized by forest clearing giving farmers land rights deforestation becomes an investment to the farmer and a title establishment strategy land titling and credit programmes may therefore increase deforestation

environmental degradation in developing countries households and the reverse environmental kuznets curve abstract we propose an alternative explanation for the inverted u shape relationship between income and environmental degradation in developing countries production and consumption patterns of rural households are the main cause of environmental damage with a conventional household model we demonstrate that the so called environmental kuznets curve may arise when the restrictive assumption of a set of perfect markets for factors and commodities is relaxed depending on the criterion or indicator that is used to represent environmental pressure however we demonstrate that the reverse may also hold this finding highlights the importance of selecting the appropriate dependent variable in regression analyses

evolution of land tenure institutions and development of agroforestry evidence from customary land areas of sumatra it is widely believed that land tenure insecurity under a customary tenure system leads to a socially inefficient resource allocation this article demonstrates that the practice of granting secure individual ownership to tree planters spurs earlier tree planting which is inefficient from the private point of view but could be efficient from the viewpoint of the global environment regression analysis based on primary data collected in sumatra indicates that an expected increase in tenure security in fact led to early tree planting it is also found that customary land tenure institutions have been evolving towards greater tenure security responding to increasing scarcity of land

optimal soil conservation and the reform of agricultural pricing policies abstract soil degradation is often blamed for the poor performance of agriculture in developing economies so too are policies which keep the prices of both outputs and inputs artificially low some economists have argued that pricing reforms will encourage soil depletion others say that such reforms will encourage soil conservation to evaluate these claims this paper develops models of the optimal control of soil erosion and soil fertility it is shown that the effect could go either way but that there are strong reasons for suspecting that pricing reforms will not affect soil conservation dramatically

the economics of tropical forest land use options tropical deforestation is generally characterized as conversion of forest land to alternative uses notably agriculture this would suggest the need for rational decision making concerning the optimal allocation of tropical forest land between competing uses the following paper explores this problem by devising rules for determining optimal land use allocation between timber and agriculture at the stand and forest levels a complementary intertemporal model for optimal allocation of forest land to agricultural conversion at the forest level is also developed and used to derive a demand relationship for agricultural conversion which is then approximated through empirical estimation

correlated information and mechanism design in models of asymmetric information possession of private information leads to rents for the possessors this induces mechanism designers to distort away from efficiency the authors show that this is an artifact of the presumption that information is independently distributed rent extraction in a large class of mechanism design games is analyzed and a necessary and sufficient condition for arbitrarily small rents to private information is provided additionally the two person bargaining game is shown to have an efficient solution under first order stochastic dominance and a hazard rate condition similar conditions allow full rent extraction in milgrom weber auctions

investments in the schooling and health of women and men quantities and returns this paper surveys the evidence on recent trends in the growth of human capital investments in women that raised womens productivity in thus century in most countries patterns in school investments in men and women across regions and across birth cohorts within countries indicate that expected years of school enrollment is converging between low and high income countries to where the gaps have closed from about seven years in 1950 to five years in 1985 women today are receiving nearly as many years of education as men in industrially advanced high income countries latin america south east and east asia are relatively similar to the high income countries at the other extreme in most of the countries of south and west asia and north and sub saharan africa women receive about two fifths to three fourths the number of years of schooling as men do in every region however the ratio of female to male expected years of enrollment increased from 1950 to 1985 gender differences in mortality and nutritional status reveal that there has been a dramatic but largely unexplained advance in female longevity relative to male in the 20th century in most countries with the exception of certain countries in south asia this development is associated with the shift of populations from dependence on agriculture to working in urban areas these changes are a major source of decreasing inequality within and between countries in this century market failure could be responsible for families investing less than the socially efficient amount in girls than boys there are problems in measuring without bias these private and social return empirical patterns across countries in estimated returns to schooling illustrate that private returns at the primary secondary and higher education levels can vary for women and men

a nonparametric efficient public good decision mechanism undominated bayesian implementation abstract it is known that with incomplete information there are bayesian mechanisms that undertake public projects achieving ex post efficiency and budget balance however there are two shortcomings in these mechanisms first the mechanism designer is required to know the agents prior beliefs which is quite demanding second the mechanism may possess multiple equilibria including undesirable ones this paper presents a bayesian mechanism that is nonparametric in that the mechanism designer cannot incorporate any information other than that received from the agents moreover at all undominated bayesian equilibria of the mechanism the public project is undertaken efficiently and budget is balanced journal of economic literature classification numbers c72 d78 d82

optimal contracts for teams in a team subject to both adverse selection each member s ability is known only to himself and moral hazard effort cannot be observed optimal contracts are under certain conditions linear in the team s output the outcome is the same whether the principal observes just the total output or each individual s contribution thus monitoring is not needed to prevent shirking by team members instead the role of monitoring is to discipline the monitor production is a collective enterprise by workers in a firm or firms in a joint venture the synergy that is the reason for the team s existence may mean that an individual s contribution to the team s output is not distinguishable so that it is impossible to pay him according to his own productivity how should the principal remunerate the team members so as to maximize his own profit in this paper we analyze incentives in teams with asymmetric information both adverse selection each member s ability is known only to himself and moral hazard effort cannot be observed directly holmstrom 1982 showed that in a team model with moral hazard the principal can ensure an outcome arbitrarily close to the full information ideal by using a contract that punishes each team member arbitrarily severely whenever team output falls below some target however this seems to be an unrealistically drastic way of solving the moral hazard problem in our model we in effect prevent the principal from using such a contract by introducing adverse selection in addition to moral hazard and by assuming that ability and effort interact in such a way that the principal is unable to disentangle an agent s effort from his ability under the assumption that the principal and the team members are risk neutral we shall show that the principal can implement his information constrained optimum simply by offering each agent a payment linear in the team s output although the essential feature of our analysis is the interaction between adverse selection and moral hazard this result can be understood by first considering the special case in which the agents abilities are common knowledge in this case the moral hazard problem can be completely solved the principal can do as well as he

education and economic growth in taiwan a case of successful planning abstract taiwan s education system had three features which were instrumental to its spectacular economic success first it had an infrastructure already built up by 1950 for basic education that extended fairly broadly among the population second a ready supply of highly educated labor arrived in 1949 50 from the mainland to replace the japanese and to begin the process of building the local economy most important the education system was planned to grow in a manner that closely matched the changing requirements of the growing economy the compulsary basic education was raised from six to nine years the secondary level curriculum was shifted more toward vocational fields the supply of university graduates was strictly limited and the university curriculum changed to emphasize science and engineering subjects the levels above basic junior high level were expanded but disproportionately into the private sector so they were not as costly to the government

subgame perfect implementation of bargaining solutions abstract this paper provides simple four stage game forms that fully implement a large class of two person bargaining solutions in subgame perfect equilibrium the solutions that can be implemented by our game forms are those that maximize a monotonic and quasi concave function of utilities after normalizing each agent s utility function so that the maximum utility is 1 and the utility of the disagreement outcome is 0 this class of solutions includes the nash kalai smorodinsky and relative utilitarian solutions the game forms have a structure of alternating offers and contain no integer device

subgame perfect implementation this paper examines the use of stage mechanisms in implementation problems and provides a partial characterization of the set of subgam e perfect implementable choice rules it is shown that in many economic environments virtually an y choice rule can be implemented to illustrate the power of this approach the paper discusses a number of models in which it is possible to implement the first best although it wouldn t have been possible to do so without using stage mechanisms the diversity of these models suggests that subgame perfect implementation may find wide application copyright 1988 by the econometric society

the causal effect of education on farm related disability evidence from a compulsory schooling reform in taiwan we investigate the causal effect of education on the incidence and severity of farm related disability our dataset is comprised of 75 708 farmers drawn from the taiwanese agriculture census supplemented with administrative data on farmer disability approximately 46 of the farmers in our sample were affected by legislation expanding compulsory schooling from the primary school level to the junior high school level utilizing the compulsory schooling reform as a natural experiment for identification we estimated an instrumental variable two part model of the incidence and severity of disability where the latter is measured using the number of disabled days for farmers aged from 35 to 45 we find that greater educational attainment significantly reduced the likelihood of farm related disability as well as the severity of disability two potential mechanisms for this effect were fewer on farm work days and less use of chemical inputs to farm production among more educated farmers

characterizing natural implementability the fair and walrasian correspondences abstract we characterize natural implementability in exchange economies when a social choice correspondence possibly recommends a pareto efficient allocation where the common marginal rate of substitution is not determined uniquely we find that the no envy and efficient or fair correspondence cannot be implemented by any natural mechanism with a price and a quantity announcement but can be implemented by a natural mechanism with a price and two quantity announcement on the other hand the constrained walrasian correspondence can be implemented by a natural price quantity mechanism with budget balance journal of economic literature classification numbers c72 d51 d63 d78

dominant strategy implementation in economic environments abstract we study dominant strategy implementation especially in economic environments we first show that in general environments strategy proofness and quasi strong non bossiness together are necessary and sufficient for dominant strategy implementation via the associated direct revelation mechanism we next prove that in weak separable environments strategy proofness is sufficient for dominant strategy implementation by using an augmented revelation mechanism similar to the one devised by jackson palfrey and srivastava jackson m o palfrey t r srivastava s 1994 undominated nash implementation in bounded mechanisms games econ behav 6 474 501 moreover we focus on pure exchange economies without free disposal and try to construct another augmented revelation mechanism that satisfies balancedness in and out of equilibrium and which implements all strategy proof social choice functions in dominant strategy equilibria

economic parameters of deforestation recent debate about how timber prices affect deforestation has focused mainly on how log export bans imposed in many developing countries to protect domestic timber processing affect deforestation one side argues that the lower domestic timber prices that result from banning log exports increase deforestation by making forestry less profitable than competing land uses such as agriculture the other argues that lower timber prices reduce profits from logging so they slow down deforestation caused by logging the author argues that the conflicting views result from simplistic analysis that ignores differences between types of forest the two positions are reconciled by distinguishing between unmanaged forests for example biologically mature previously unlogged primary forests and managed forests such as forest plantations cultivated for periodic harvest this distinction allows the derivation of unambiguous comparative static results and is useful because many nontimber benefits from forests such as biodiversity conservation are associated mainly with unmanaged forests the distinction between managed and unmanaged forests leads to both unconventional and conventional results all things being equal a lower timber price results in larger areas of unmanaged forests and smaller areas of managed forests that is measures that reduce the producer price for timber for example import restrictions in timber consuming countries and export restrictions in timber producing countries are suitable as a second best policy to reduce the pressure on unmanaged forest frontiers most logging in tropical forests occurs in unmanaged forests so the claim that trade restrictions such as log export bans increase deforestation is inconsistent with profit maximizing land use a fee on land used for logging is preferable to a tax on timber output which is far more common but encourages logging waste technological interventions that increase the intensity of forestry or alternative land uses are an ambiguous instrument for the conservation of unmanaged forests if demand elasticity for outputs is high an intervention that increases the intensity of agriculture logging or other land uses increases incentive for conversion of unmanaged forests the building of roads is particularly harmful to the conservation of unmanaged forests as it increases incentives for logging and subsequent alternative land uses proper pricing of forest lands would increase land prices and lead to market driven intensification accompanied by forest protection such pricing policies would be preferable to a technological intervention that increases land use intensity with ambiguous outcomes for forest protection if unmanaged forest is converted to agriculture the effect of lowering the decisionmaker s discount rate depends on the size of timber rents from logging unmanaged forests if the standing timber has high commercial value a lower discount rate would slow conversion of unmanaged forests if the standing timber has no commercial value logging is an investment for obtaining future benefits of alternate land use a lower discount rate would stimulate this investment and increase the conversion of unmanaged forests also if unmanaged forests are converted to managed forests a lower discount rate can increase conversion since profits from managed forestry are higher with a lower discount rate

changes in the returns to education in costa rica abstract i document patterns in the returns to education in costa rica from 1976 to 1992 the most important change during this period was that from the late 1970s to the mid 1980s the return to education fell by about one fourth i construct demand and supply indices within a fixed manpower requirements framework to estimate demand and supply shifts i find a significantly positive relationship between measures of demand for education and a significantly negative relationship between measures of supply for education these findings suggest that calculations based on the returns to education such as the returns to social investments in education must take into account future changes in the returns to education as supply and demand conditions develop

asymmetric information incentives and intrafirm resource allocation this paper considers the question how should a firm allocate a resource among divisions when the productivity of the resource in each division is known only to the division manager obviously if the divisions as represented by their managers are indifferent among various allocations of the resource the headquarters can simply request the division managers to reveal their private information on productivity knowing that the managers have no incentive to lie the resource allocation problem can then be solved under complete or at least symmetric information this aspect is a flaw in much of the recent literature on this topic i e there is nothing in the models considered which makes divisions prefer one allocation over another thus although in some cases elaborate allocation schemes are proposed and analyzed they are really unnecessary in the model we develop a division can produce the same output with less managerial effort if it is allocated more resources and effort is costly to the manager we further assume that this effort is unobservable by the headquarters so that it cannot infer divisional productivity from data on divisional output and managerial effort given these assumptions we seek an optimal resource allocation process our results show that certain types of transfer pricing schemes are optimal in particular if there are no potentially binding capacity constraints on production of the resource then an optimal process is for each division to choose a transfer price from a schedule announced by the headquarters division managers receive a fixed compensation minus the cost of the resource allocated to them at the chosen transfer price resources are allocated on the basis of the chosen transfer prices if there is a potentially binding constraint on resource production a somewhat more complicated but similar scheme is required

efficient repeated implementation this paper examines repeated implementation of a social choice function scf with innitely lived agents whose preferences are determined randomly in each period an scf is repeated implementable in nash equilibrium if there exists a sequence of possibly history dependent mechanisms such that i its nash equilibrium set is non empty and ii every nash equilibrium outcome corresponds to the desired social choice at every possible history of past play and realizations of uncertainty we show with minor qualications that in the complete information environment an scf is repeated implementable in nash equilibrium if and only if it is ecient we also discuss several extensions of our analysis including constructions employing only nite mechanisms

poverty alleviation and tropical forests what scope for synergies abstract this paper explores the state of the art of the two way causal links between poverty alleviation and natural tropical forests microimpacts of rising poverty can increase or slow forest loss at the macrolevel poverty also has an ambiguous effect but it is probable that higher income stimulates forest loss by raising demand for agricultural land the second question is what potential forest led development has to alleviate a country s poverty in terms of producer benefits consumer benefits and economy wide employment natural forests widely serve as safety nets for the rural poor but it proves difficult to raise producer benefits significantly urban consumer benefits from forest an important target for pro poor agricultural innovation are limited and seldom favor the poor absorption of poor unskilled labor is low in forestry which tends to be capital intensive natural forests may thus lack comparative advantage for poverty alleviation there are few win win synergies between natural forests and national poverty reduction which may help to explain why the loss of tropical forests is ongoing this may have important implications for our understanding of sustainable forest development and for the design of both conservation and poverty alleviation strategies

optimal incentive contracts with multiple agents abstract a setting in which a single principal contracts with two agents who possess perfect private information about their own productivity is considered with correlated productivities each agent s private information also provides a signal about the other agent s productivity in contrast to the setting in which there is only one agent it is shown that such private information may be of no value to the agents it is only if the agents are risk averse that their private information may allow them to command rents moreover when the agents are constrained only to reveal their private information truthfully as a nash equilibrium the pareto optimal incentive scheme may induce the agents to adopt strategies other than truth telling this leads to the consideration of truth telling equilibria that are not pareto dominated in the subgame played by the agents among all such equilibria the one preferred by the principal restricts one agent to tell the truth as a dominant strategy and the other as a nash response to truth

collusive dominant strategy truthfulness abstract we show that collusion and wrong beliefs may cause a dramatic efficiency loss in the vickrey mechanism for auctioning a single good in limited supply we thus put forward a new mechanism guaranteeing efficiency in a very adversarial collusion model where the players can partition themselves into arbitrarily many coalitions exchange money with each other and perfectly coordinate their actions our mechanism bypasses classic impossibility results such as those of green and laffont and of schummer by providing the players with a richer set of strategies making it dominant for every coalition c to instruct each of its members to report truthfully not only his own valuation but also his belonging to c our mechanism is coalitionally rational which implies being individually rational for independent players

implementation in undominated strategies a look at bounded mechanisms this paper examines the impact of placing natural restrictions on the mechanisms considered for implementation problems it is shown that if all mechanisms are considered and preferences satisfy a basic condition then any social choice correspondence can be implemented in undominated strategies an example points out that the strength of this result derives from the use of mechanisms with questionable features in part of the message space the agent who announces the highest integer is rewarded this sort of tail chasing construction common in the constructive proofs of the literature is used to assure that undesired strategy combinations do not form an equilibrium if such mechanisms are ruled out then the social choice correspondences which can be implemented in undominated strategies satisfy an incentive compatibility type condition called strategy resistence for social choice functions this is equivalent to strategy proofness this contrast suggests that this issue should be examined as it applies to other solution concepts used in implementation theory the last portion of the paper begins to explore the issue as it relates to nash implementation and undominated nash implementation

implementing coordinated team play abstract this note studies a moral hazard model of joint production in which there are strong gains to coordination the mechanism we propose for resolving the tacit collusion problem that arises in our setting makes use of at will contracts which provide the agents with the option to quit at any time journal of economic literature classification numbers c72 d82

complexity and repeated implementation this paper examines the problem of repeatedly implementing an ecient social choice function when the agents preferences evolve randomly we show that the freedom to set dierent mechanisms at dierent histories can give the planner an additional leverage to deter undesirable behavior even if the mechanisms are restricted to be simple and nite specically we construct a history dependent sequence of simple mechanisms such that with minor qualications every pure subgame perfect equilibrium delivers the correct social choice at every history while every mixed equilibrium is strictly pareto dominated more importantly when faced with agents with a preference for less complex strategies at the margin the ecient social choice function can be repeatedly implemented in subgame perfect equilibrium in pure or mixed strategies our results demonstrate a positive role for complexity considerations in mechanism design

implementation of stable solutions to marriage problems abstract this note analyzes the possibility of implementing stable outcomes for marriage markets our first result shows a contradiction between the use of stable mechanisms and the hypothesis of agents behavior considered in the nash equilibrium concept we analyze the possibility of implementing two sets of stable allocations by employing two types of mechanisms the first mechanism is a now or never choice process that permits us to implement in undominated nash equilibria the set of all the stable allocations the second choice process is the classic algorithm in matching theory the gale shapley mechanism a reversal property is observed in such a mechanism when agents act strategically the use of a mechanism which selects the best solution for one side of the market in the absence of strategic behavior yields the best stable solution for the agents on the other side under dominance solvability journal of economic literatureclassification numbers c72 d78 j41

changing returns to education in taiwan 1978 1991 abstract we find that private rates of return in taiwan are highest for higher education levels for example university and lowest for lower education levels for example junior high school and that private returns are higher for women than men at all education levels unlike most other studies of changing returns to education over time in developing countries we find that private returns for all education levels are remarkably stable during 1978 1991 in taiwan

asymmetric information bargaining problems with many agents a yes or no decision must be made about some issue all agents must agree the coase theorem asserts that the efficient outcome will always result suppose the value positive or negative that an individual attaches to an affirmative decision is privately known to that individual it is proved under very mild conditions that with independent types as the number of agents increases the probability of an affirmative efficient decision goes to zero an example in which it is common knowledge that an affirmative decision is efficient and yet the probability of such a decision goes to zero is given

dominant strategy implementation of bayesian incentive compatible allocation rules abstract a large literature on incentive mechanisms represents incentive constraints by the requirement that truthful reporting be a bayesian equilibrium this paper identifies mechanism design problems for which there is no loss in replacing bayesian incentive compatibility by the stronger requirement of dominant strategies we identify contexts where it is possible to change the transfer payments of an optimal bayesian mechanism so as to create dominant strategies and yet leave every participant s expected utility unchanged we also address the issue of multiple equilibria and unique implementation contexts where these results apply include auctions bilateral bargaining procurement contracting and intrafirm resource allocation

the conditional auction mechanism for sharing a surplus a first bid auction to allocate the leadership role is used to choose a public decision and a balanced set of transfers the mechanism is shown to implement an equal sharing of the surplus above the average utility level at the equilibrium an agent s message reveals the other agent s utility when only two players are involved and the exact value of the joint surplus a variety of other contexts allow for the construction of similar auction like mechanisms displaying the same mirror image effect

forest resource depletion soil dynamics and agricultural productivity in the tropics abstract a two sector dynamic model for agriculture and forestry is proposed agricultural yields are a function of the rate of deforestation the forest stock and purchased inputs we examine the impact of changes in the social discount rate net returns to agriculture and direct marginal benefits of the forest stock benefits on the optimal deforestation path under the assumption of a quadratic agricultural yield function finally steady state comparative static analysis is conducted

a note on soil depth failing markets and agricultural pricing abstract due to implementation of structural adjustment programs prices of agricultural products have increased in many developing countries from an environmental point of view it is an open question whether these price increases stimulate sustainable agriculture in the context of a simple model that includes labour intensive investments in soil conservation it is demonstrated that rising prices for agricultural outputs unambiguously increase soil conservation in the steady state with imperfect labour markets the reverse effect may occur giving rise to a conflict between agricultural reform programs and soil conservation

a model of shifting cultivation can soil conservation reduce deforestation shifting cultivators manage soil not only by adjusting soil use on already cleared lands as in continuous cultivation but also by clearing forests to obtain new fertile soils this study examines the crucial link between on farm soil conservation and deforestation in shifting cultivation by modeling forest clearing as an investment in soil for a private farmer more generally by doing so the study attempts to integrate deforestation and soil conservation models which have been separately developed in the literature our policy goal is to arrest tropical deforestation as destruction of global commons caused by land degradation in shifting cultivation while improving the well being of poor shifting cultivators our integrated approach enables joint policy analyses of deforestation and land degradation three welfare enhancing policies are considered the first is agricultural and nonagricultural subsidies affecting farm and nonfarm income opportunities the second is fiscal and tenure policies affecting discount rates our question is whether the link between forest clearing and soil fertility alters the outcomes of these two standard macroeconomic policies commonly found in the literature the third policy or program is various soil conservation measures affecting soil regeneration and erosivity on already cleared lands this article examines a very important question which has received little attention in previous theoretical works can soil conservation reduce deforestation this study confirms anti deforestation effects of the promotion of nonfarming activities a common and often emphasized finding in previous works among shifting cultivators more importantly it also demonstrates that improving various soil conservation measures not only discourages forest clearing among shifting cultivators but also tends to have greater effects on forest protection than promoting nonfarming activities contrarily agricultural price subsidy or technological progress gives rise to the opposite outcome and lowering the farmer s discount rate or improving tenure security encourages him her to clear more forests just to accumulate soil

amicable divorce dissolving a partnership with simple mechanisms abstract this paper considers mechanisms for allocating the assets of a dissolving partnership that can be specified without information on the distribution of valuations of the asset or the level of risk aversion of the participants for the case of a single asset and risk averse agents three simple mechanisms are considered these mechanisms can be ranked in terms of ex post efficiency and partially ranked in terms of interim expected utility the efficiency of the alternating selection mechanism is considered for environments when there are many items to be allocated agents are risk neutral and transfers are prohibited conditions are given when a myopic strategy of picking the most preferred abailable item forms an equilibrium and these conditions are satisfied under independence under the further assumption of identical distributions of valuations it is shown that the total expected efficiency loss is at most 1 2 of the maximal value of a single item regardless of how many items are to be allocated

nash equilibrium and welfare optimality if is a set of social alternatives a social choice rule scr assigns a subset of a to each potential profile of individuals preferences over a where the subset is interpreted as the set of welfare optima a game form or mechanism implements the social choice rule if for any potential profile of preferences 1 any welfare optimum can arise as a nash equilibrium of the game form implying in particular that a nash equilibrium exists and 2 all nash equilibria are welfare optimal the main result of this paper establishes that any scr that satisfies two properties monotonicity and no veto power can be implemented by a game form if there are three or more individuals the proof is constructive

implementation in minimax regret equilibrium this note studies the problem of implementing social choice correspondences in environments where individuals have doubts about the rationality of their opponents we postulate the concept of minimax regret as our solution concept and show that social choice correspondences that are maskin monotonic and satisfy the no veto power condition are implementable in minimax regret equilibrium for all 0 1

on some recent results in incomplete information implementation this paper provides a review of some recent results on implementation in incomplete information environments this literature is concerned with characterizing the class of social choice functions that can be implemented as equilibrium outcomes of appropriately constructed games different game forms normal and extensive forms and different equilibrium concepts nash equilibrium sequential equilibrium etc lead to different characterizations the discussion focuses on the key difficulties that arise in implementing social choice functions in incomplete information environments and describes some of the alternative characterizations