The Incentive‐Compatibility Desideratum

Christian List and Philip Pettit

in Group Agency

Published in print April 2011 | ISBN: 9780199591565
Published online May 2011 | e-ISBN: 9780191725494 | DOI:
The Incentive‐Compatibility Desideratum

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A second desideratum of good organizational design is incentive compatibility. This is satisfied to the extent that group members are given incentives to act in a way that supports an expected mode of group behavior; the expected behavior may be truthfulness in some contexts, cooperativeness in others. There are at least two routes by which we may promote incentive compatibility. One, the organizational route, takes people's behavioral dispositions as given and seeks to set up an organizational structure that produces the appropriate aggregate result on the basis of those dispositions. The other, a behavioral route, takes the organizational structure as given and looks for ways of changing people's behavioral dispositions — these measures might be educational, communicative or social — so as to produce a suitable result. Each route poses considerable difficulties, whether put into operation alone or in conjunction with the other; incentive-compatibility is a particularly elusive goal.

Keywords: incentive-compatibility; strategy-proofness; equilibrium; mechanism design; organizational route; behavioral route; truthfulness; cooperativeness

Chapter.  12161 words. 

Subjects: Metaphysics

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