Triple implementation by sharing mechanisms in production economies with unequal labor skills

Abstract

In production economies with unequal labor skills, we study axiomatic characterizations of Pareto subsolutions which are implementable by sharing mechanisms in Nash, strong Nash, and subgame perfect equilibria. The sharing mechanism allows agents to work freely and distributes the produced output to the agents, according to the profile of labor hours and the information on demands, prices, and labor skills. Based on the characterizations, we find that most fair allocation rules, which embody the ethical principles of responsibility and compensation, cannot be implemented when individuals' labor skills are private information.

Strategy-proofness and efficiency in labour production economy with unequal skills

“…In the framework of axiomatic bargaining, Yoshihara (2003) characterize a class of efficient allocation rules which allow people to be partially responsible for their skill levels. Yamada and Yoshihara (2007); Yoshihara and Yamada (2010) provide conditions for allocation rules in production economies with unequal skills which are implementable in Nash equilibria in a type of mechanism in which individuals may exaggerate or hide their skills, while the mechanism is designed so that it does not happen in equilibrium. In contrary, we assume that one cannot exaggerate his skill while he can hide it, because under linear technology the planner can always detect exaggeration ex-post and even partially ex-ante, and because hiding is the only type of information manipulation which can be handled in the framework of strategyproofness (see "Discussions" after the definition of strategy-proofness).…”