Honesty and Epistemological Implementation of Social Choice Functions with Asymmetric Information
28 Pages Posted: 4 Aug 2022 Last revised: 21 Nov 2022
Date Written: November 20, 2022
We investigate the implementation of social choice functions with asymmetric information concerning the state from an epistemological perspective. Although agents are either selfish or honest, they do not expect other participants to be honest. However, an honest agent may exist not among participants but in their higher-order beliefs. We assume that “all agents are selfish” never happens to be common knowledge. We show a positive result in general asymmetric information environments, demonstrating that with a minor restriction on signal correlation called information diversity, any incentive-compatible social choice function, whether ethical or nonethical, is uniquely implementable in the Bayesian Nash equilibrium.
Keywords: unique implementation, asymmetric information, honesty, no common knowledge on selfishness, information diversity
JEL Classification: C72, D71, D78, H41
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