Do coalitions matter in designing institutions?

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Korpela , V , Lombardi , M & Vartiainen , H 2020 , ' Do coalitions matter in designing institutions? ' , Journal of Economic Theory , vol. 185 , 104953 .

Title: Do coalitions matter in designing institutions?
Author: Korpela, Ville; Lombardi, Michele; Vartiainen, Hannu
Contributor organization: Economics
Helsinki Centre of Economic Research (HECER), alayksikkö 2013-2021
Date: 2020-01
Language: eng
Number of pages: 19
Belongs to series: Journal of Economic Theory
ISSN: 0022-0531
Abstract: In this paper, we re-examine the classical questions of implementation theory under complete information in a setting where coalitions are fundamental behavioral units, and the outcomes of their interactions are predicted by applying the solution concept of the core. The planner's exercise includes designing a code of rights that specifies the collection of coalitions having the right to block one outcome by moving to another. A code of individual rights is a code of rights in which only unit coalitions may have blocking powers. We provide the necessary and sufficient conditions for implementation (under core equilibria) by codes of rights, as well as by codes of individual rights. We also show that these two modes of implementation are not equivalent. The results are robust and extend to alternative notions of core, such as an externally stable core. Therefore, coalitions are shown to bring value added to institutional design. The characterization results address the limitations that restrict the relevance of the existing implementation theory. (C) 2019 Elsevier Inc. All rights reserved.
Subject: Core
Implementation theory
Rights structure
511 Economics
Peer reviewed: Yes
Rights: cc_by_nc_nd
Usage restriction: openAccess
Self-archived version: acceptedVersion

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