Truth-telling Mechanism Research Articles

Risk-Averse and Self-Interested Shifts in Groups in Both Median and Random Rules

The purpose of this study was to determine whether attitudes toward risk and altruism are affected by being in a group or being alone. In contrast to previous economic research on group decision-making, we excluded the effects of group informal discussions, which are thought to be a “black box” when individuals make decisions in a group. In this regard, the subjects in our experiment were only requested to show their faces to the other members, without further communication. Moreover, we adopted two collective decision rules, i.e., the median rule and the random rule, which provide the truth-telling mechanism. In the experiments of both anonymous investment and donation, we found that the subjects who made decisions in a group offered significantly lower amounts than those who made decisions alone, after controlling for individuals’ risk and altruistic preferences. The findings imply that people are more risk-averse and self-interested when they are in a group, regardless of which collective decision rules are adopted.

Tell the truth or not? The montero mechanism for emissions control at work

We experimentally test the truth-telling mechanism proposed by Montero (2008) for eliciting firms' abatement costs. We compare this mechanism with two well-known alternative allocation mechanisms, free and costly allocation of permits at the Pigouvian price. Controlling for the number of firms and the firms' maximal emissions, we find that, in line with the theoretical predictions, firms over-report their maximal emissions under free allocation of permits and under-report these under costly allocation of permits. Under Montero's mechanism, by contrast, firms almost always report their maximal emissions truthfully. However, in terms of efficiency, the difference between Montero's mechanism and costly allocation disappears with industries including more than one firm.

“Win-win Cooperation” Between Government and the Third-party Education Evaluation Agency—Enlightenment from Incentive Compatibility Theory

With the separation reform of supervision, running and evaluation in education in China, the government and the third-party evaluation agency begin to cooperate to conduct education evaluation. Obviously, the government and the third-party education evaluation agency have “different” interests demand because of the differences in identity. Existing research has recognized the the problem of “damage of public interest” that may arise from conflicts of interest and incompatibility between the two and the scholars also tried to solve the conflicts to realize the ideal expectation and vision of “win-win cooperation”. However, how can “win-win cooperation” of the government and the third-party evaluation agency be realized? This is the goal of the research. By using critical discourse analysis, this paper intends to clarify the interests compatibility between the government and third-party education evaluation agency, based on which, effective measures are proposed to avoid the moral hazard behaviors generated by the third-party education evaluation agency pursuing “selfish interests”. Consequently, the study finds that constructing relevant systems based on the “truth telling mechanism” of Incentive Compatibility Theory enables the third-party education evaluation agency to pursue its own interests through “legitimate ways” rather than “unjustified opportunistic ways”, thus, enhancing “collective value” while increasing “private interests”.

Truth-Telling Mechanism for Two-Way Relay Selection for Secrecy Communications With Energy-Harvesting Revenue

This paper brings the novel idea of paying the utility to the winning agents in terms of some physical entity in cooperative communications. Our setting is a secret two-way communication channel where two transmitters exchange information in the presence of an eavesdropper. The relays are selected from a set of interested parties, such that the secrecy sum rate is maximized. In return, the selected relay nodes’ energy harvesting requirements will be fulfilled up to a certain threshold through their own payoff so that they have the natural incentive to be selected and involved in the communication. However, relays may exaggerate their private information in order to improve their chance to be selected. Our objective is to develop a mechanism for relay selection that enforces them to reveal the truth since otherwise they may be penalized. We also propose a joint cooperative relay beamforming and transmit power optimization scheme based on an alternating optimization approach. Note that the problem is highly non-convex, since the objective function appears as a product of three correlated Rayleigh quotients. While a common practice in the existing literature is to optimize the relay beamforming vector for given transmit power via rank relaxation, we propose a second-order cone programming-based approach in this paper, which requires a significantly lower computational task. The performance of the incentive control mechanism and the optimization algorithm has been evaluated through numerical simulations.

History of a Failure: Attempts to Create a National Truth and Reconciliation Commission in Bosnia and Herzegovina, 1997–2006

Several initiatives to create a national Truth and Reconciliation Commission (TRC) for Bosnia and Herzegovina were launched between 1997 and 2006, but none came to fruition. This article explains the rationale behind the pursuit of a truth-telling mechanism alongside the International Criminal Tribunal for the former Yugoslavia (ICTY), as well as the resistance to such initiatives both internationally and domestically. It argues that, despite the considerable efforts of external actors to create a TRC for Bosnia, the project foundered for three principal reasons: political resistance, institutional rivalry between the ICTY and the TRC project, and the TRC project’s lack of legitimacy, notably among Bosnia’s victim associations. The history of the failed TRC project in Bosnia holds important lessons for ongoing truth-seeking attempts in the region and beyond, and highlights problems that arise in postconflict societies with a high level of international involvement.

Coordination of Outsourced Operations at a Third-Party Facility Subject to Booking, Overtime, and Tardiness Costs

We consider an outsourcing problem where a group of manufacturers outsource jobs to a single third party who owns a specialized facility needed to process these jobs. The third party announces the time slots available on her facility, and the associated prices. Manufacturers reserve, on a first-come-first-book basis, time slots that they desire to utilize. Booking of overtime is possible, at a higher cost. A job completed after its due date incurs a tardiness cost. Each manufacturer books chunks of facility time and sequences his jobs over the time slots booked to minimize his booking, overtime, and tardiness costs. This model captures the main features of outsourcing operations in industries such as semiconductor manufacturing, biotechnology, and drug R&D. In current practice, the third party executes all outsourced jobs without performing optimization and coordination. We investigate the issue of the third party serving as a coordinator to create a win–win solution for all. We propose a model based on a cooperative game as follows: (i) Upon receiving the booking requests from the manufacturers, the third party derives an optimal solution if manufacturers cooperate, and computes the savings achieved. (ii) She devises a savings sharing scheme so that, in monetary terms, every manufacturer is better off to coordinate than to act independently or coalesce with a subgroup of manufacturers. (iii) For her work, the third party withholds a portion ρ of the booking revenue paid by the manufacturers for time slots that are released after coordination. We further design a truth-telling mechanism that can prevent any self-interested manufacturer from purposely reporting false job data to take advantage of the coordination scheme. Finally, we perform a computational experiment to assess the value of coordination to the various parties involved.

Endogenous growth and adverse selection in entrepreneurship

This paper proposes a model of Schumpeterian endogenous growth incorporating the role of market imperfections that exist due to adverse selection between investors that finance R&D and entrepreneurs that perform R&D. There is a distribution of agents indexed by a skill factor that determines one's average productivity at performing research. An entrepreneur starts-up a research venture by borrowing from an investor that funds R&D so as to invent new goods. Skill is private information, creating an adverse selection problem for the investor who designs a truth-telling mechanism. We show that an increase in the mean skill enhances growth as it leads to greater R&D productivity and investment; while an increase in the dispersion of the skill distribution dampens growth as it makes the adverse selection problem between investors and entrepreneurs more severe. The growth rate would double in the absence of adverse selection. The R&D investment of the average size firm must be subsidized threefold for the negative adverse selection effect to be nullified. We provide U.S. industry-level and European sector-level evidence in favor of the positive scale effect and negative adverse selection effect using the firm size distribution (FSD) to proxy for the entrepreneurial skill distribution.

Game theoretical mechanism design methods

Dynamic spectrum access with cognitive radios has become a promising approach to improve spectrum efficiency by adaptively coordinating different users' access according to spectrum dynamics. However, selfish users competing with each other for spectrum may exchange false private information or collude with others to get more access to the spectrum and achieve higher profits. In this article, we investigate two game-theoretical mechanism design methods to suppress cheating and collusion behavior of selfish users: a self-enforcing truth-telling mechanism for unlicensed spectrum sharing and a collusion-resistant multistage dynamic spectrum pricing game for licensed spectrum sharing.

An Incentive-Aligned Mechanism for Conjoint Analysis

This article specifies, analyzes, and validates a rigorous and practical truth-telling mechanism (game) for conjoint applications. The mechanism requires only one real product variation and has truth telling in conjoint as its Bayesian Nash equilibrium, thus making it possible to incentive align participants in most conjoint applications. Using the iPod package as the context, the author shows empirically that the mechanism substantially improves purchase prediction compared with a standard conjoint procedure.

SPEAKING TRUTH TO BIOPOWER

Much of the biopolitical literature has been preoccupied with the relationship between biopolitics and economy, or bioeconomy as it is increasingly called. Although much has been said about the economical aspects of developments in biotechnology and biomedicine, the central concept of bioeconomy has been vasdy under-theorized, a situation that leads to serious confusion over the novelty of the phenomenon. This article argues that Foucault's lectures on biopolitics clearly demonstrate how intimately its origin is bound up with political economy and liberalism. Instead of seeing biotechnology as creating an unholy alliance with contemporary capitalism, we should rather see today's developments against the backdrop of an initial relationship between biopolitics and political economy; this article seeks to elaborate the genealogy of this initial relationship. Two aspects are important in this alleged genealogy of bioeconomy: first, the concept of the population and its proper form of ‘economical’ self-regulation is essential. Second, the truth-telling mechanism (veridiction) of political economy plays a central role, because it potentially subjects any political rationality to a critical test.

Contingent valuation and actual payment for voluntarily provided passive-use values: Assessing the effect of an induced truth-telling mechanism and elicitation formats

A fundamental question about the contingent valuation (CV) method is to what degree it predicts actual payments (AP). This has particularly been an intriguing matter related to voluntary provision of public goods representing primarily passive-use values. This paper reports the results from such a CV–AP comparison. Applying a voluntary payment mechanism there exists a theoretical expectation of upward bias in CV estimates and downward bias in AP. This study applied an induced truth-telling mechanism in one treatment group to assess the hypothetical bias effect in CV. The CV estimates in this treatment group were significantly lower than in the group that did not face this mechanism. But this effect was limited to those responding/acting to dichotomous choice, not affecting those responding to open-ended questions about willingness to pay.