An impossibility result regarding behavioral implementation of efficiency with two individuals

Abstract

This thesis examines Nash implementation of behaviorally efficient social choice rules á la de Clippel (2014) with two individuals under the full behavioral domain, i.e., when individuals’ choices do not satisfy the weak axiom of revealed preferences. We propose a new definition of a dictatorial social choice rule in the full behavioral domain and show that when there are at least four alternatives, a behaviorally efficient social choice rule á la de Clippel (2014) is implementable if and only if it is dictatorial according to our definition whenever there are only two individuals under consideration. Our result parallels the impossibility result of Maskin (1999), which says that in the full rational domain, a social choice rule that satisfies the Pareto property is implementable if and only if it is dictatorial whenever there are only two individuals in the society.