We study the implementation of social choice rules in environments with externalities. We prove the impossibility of implementing efficient and α-individually rational rules in dominant strategies. We prove that the α-core is implementable in Nash equilibrium under mild restrictions and discuss the maximality and the minimality of our results. We extend our analysis to weakly efficient rules.
We study the implementability of stable correspondences in marriage markets with externalities.We prove that, contrary to what happens in markets without externalities, no stable revelation mechanism makes a dominant strategy for the agents on one side of the market to reveal their preferences. However, the stable correspondence is implementable in Nash equilibrium.Economic Literature Classication Numbers: C72, C78, D62, D78.
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