Mechanism design and the collective approach to household behavior

Abstract

Do the Revelation and Taxation Principles hold for multi-person householDo the Revelation and Taxation Principles hold for multi-person households? We provide a positive answer to the former and a negative to the latter if the household decision process is such that no mechanism can lead to inefficient choices. This unconditional version of Chiappori’s (1988) collective approach, offers a household model which can be used in a standard mechanism design approach.ds? We provide a positive answer to the former and a negative to the latter if the household decision process is such that no mechanism can lead to inefficient choices. This unconditional version of Chiappori’s (1988) collective approach, offers a household model which can be used in a standard mechanism design approach.