Microeconomic Theory Spring - 1 2005 Lecture 14 Introduction to Implementation

II. Examples of Problems Giving Rise to Incentive Compatibility Constraints A. If contributions to the cost of a public good are positively related to willingness to pay, there is an incentive to “free ride.” B. In an exchange economy setting, with agents whose preferences are unknown, there is the possibility of acting as a monopolist or monopsonist. C. In elections with more than two candidates, voting systems can give rise to incentives to vote “insincerely.”