Implementation via Rights Structures∗

In the last four decades, implementation has been playing a steadily growing role in economic theory, whose importance we can hardly deny on our part. Every modern society is familiar with several institutional “real life” mechanisms as constitutions, legal codes, rules of corporate culture and social norms that aim to rule out socially undesirable outcomes and implement solely socially desirable ones under different circumstances. With such real life mechanisms, however, it is mostly the case that the objective that the mechanism aims to implement is rather fuzzy, social desirability of the objective is sometimes questionable, and the constructs that link the objective to the existing societal preference profile are usually rough. Even in economic regulation, which may be regarded as a field of relatively well posed problems in contrast to other areas, the design of a mechanism was done more or less by “trial and error” until the Seventies in the 20th century, as the objective of the mechanism was not precisely defined.