Auctions with Ethical Concerns

25 Pages Posted: 25 Aug 2021

See all articles by Hitoshi Matsushima

Hitoshi Matsushima

University of Tokyo - Faculty of Economics

Date Written: June 17, 2021


We investigate the implementation of social choice rules (SCRs) in dominant strategy, where the central planner evaluates social welfare ethically rather than financially by excluding monetary transfers from the welfare evaluation, prohibiting redistribution, and putting heterogenous welfare weights on agents’ willingness to pay in a state-contingent manner. With such ethical concerns in mind, we show that side-payment devices play a significant role in incentivizing agents to be honest. Focusing on multiunit auctions with a single-unit demand, we consider the case in which the central planner faces a situation where multiple conflicting ethical criteria with their own advantages coexist and cannot be aggregated into a single criterion. We demonstrate a new side-payment rule design that successfully implements reasonable SCRs induced by the method of procedure explored by Matsushima (2021). We clarify when and how to use subsidies and set-asides as incentive and fairness devices, depending on the state.

Keywords: Conflicting Criteria, Ethical Social Choice, Multiunit Auctions, Single-Crossing, Strategy-Proofness.

JEL Classification: D44, D62, D63, D71, D82

Suggested Citation

Matsushima, Hitoshi, Auctions with Ethical Concerns (June 17, 2021). Available at SSRN: or

Hitoshi Matsushima (Contact Author)

University of Tokyo - Faculty of Economics ( email )

7-3-1 Hongo, Bunkyo-ku
Tokyo 113-0033

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