Politically realistic implementation with inspection : the honesty equity tradeoff

The definitive version is available at www3.interscience.wiley.comWe study dominant strategy mechanisms where the planner knows the distribution of types and the agents are instructed to announce their types to the planner. It is assumed that the planner has access to a technology of inspection which is costly but perfect, and that he can penalize an agent who is inspected after announcements have been made if he is found to have lied about his type. It shall be shown that, in general, the welfare-maximizing mechanism that respects minimal equity will induce some agents to lie about their typesPublicad