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If A 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, (i) any welfare optimum can arise as a Nash equilibrium of the game form (implying, in particular, that a Nash equilibrium exists) and, (ii) 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.

We study a credit model where, because of adverse selection, unprofitable projects may nevertheless be financed. Indeed they may continue to be financed even when shown to be lowquality if sunk costs have already been incurred. We show that credit decentralization offers a way for creditors to commit not to refinance such projects, thereby discouraging entrepreneurs from undertaking them initially. Thus, decentralization provides financial discipline. Nevertheless, we argue that it puts too high a premium on short-term returns. The model seems pertinent to two issues: "soft budget constraint" problems in centralized economies, and differences between "Anglo-Saxon" and "German-Japanese" financing practices.

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