Behavioral Constraints on the Design of Subgame-Perfect Implementation Mechanisms

• 成果类型: Article
• 署名作者: Fehr, Ernst; Powell, Michael; Wilkening, Tom
• 署名单位: University of Zurich; Northwestern University; University of Melbourne
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/aer.20170297
• 发表日期: 2021
• 页码: 1055-1091
• 关键词: incomplete contracts; public-goods; OWNERSHIP; provision; RENEGOTIATION; INFORMATION; GOVERNMENT; fairness; benefits; demand

摘要

We study subgame-perfect implementation (SPI) mechanisms that have been proposed as a solution to incomplete contracting problems. We show that these mechanisms, which are based on off-equilibrium arbitration clauses that impose large fines for lying and the inappropriate use of arbitration, have severe behavioral constraints because the fines induce retaliation against legitimate uses of arbitration. Incorporating reciprocity preferences into the theory explains the observed behavioral patterns and helps us develop a new mechanism that is more robust and achieves high rates of truth-telling and efficiency. Our results highlight the importance of tailoring implementation mechanisms to the underlying behavioral environment.