Social Design pp 157-171 | Cite as

Second Thoughts of Social Dilemma in Mechanism Design

  • Tatsuyoshi Saijo
Part of the Studies in Economic Design book series (DESI)


This paper shows that second thoughts are not an innocent device in our daily life, but it is human wisdom that plays an important role in resolving problems such as social dilemmas. We design a simple mechanism to achieve Pareto efficiency in social dilemmas and then compare the performance of this mechanism with and without second thoughts. First, second thoughts change the payoff structure of the game in favor of cooperation. Second, this mechanism is robust even when players deviate from a payoff maximizing behavior.


Second thoughts Subgame perfection Social dilemma Cooperation Mechanism design 

JEL Classification

C72 C92 D74 



The author thanks Yoshitaka Oakano for his helpful comments and suggestions. This research was supported by Scientific Research A (24243028 and 17H00980) and Challenging Exploratory Research (16K13354) of the Japan Society for the Promotion of Science; the Research Institute for Humanity and Nature (RIHN Project Number 14200122); and “Experimental Social Sciences: Toward Experimentally-based New Social Sciences for the 21st Century,” a project funded by a Grant-in-Aid for Scientific Research on Priority Areas from the Ministry of Education, Science and Culture of Japan.


  1. Andreoni, J., & Varian, H. R. (1999). Preplay contracting in the prisoners’ dilemma. Proceedings of the National Academy of Sciences, 96(19), 10933–10938.CrossRefGoogle Scholar
  2. Fehr, E., Powell, M., & Wilkening, T. (2015). Behavioral limitations of subgame-perfect implementation.Google Scholar
  3. Huang, X., Masuda, T., & Saijo, T. (2017). Cooperation among behaviorally heterogeneous players in social dilemma with stay or leave decisions (University of Arizona Department of Economics working paper series 2017-16).Google Scholar
  4. Hurwicz, L. (1979). Outcome functions yielding Walrasian and Lindahl allocations at Nash equilibrium points. The Review of Economic Studies, 46(2), 217–225.CrossRefGoogle Scholar
  5. Hurwicz, L., & Schmeidler, D. (1978). Construction of outcome functions guaranteeing existence and Pareto optimality of Nash equilibria. Econometrica: Journal of the Econometric Society, 46, 1447–1474.CrossRefGoogle Scholar
  6. Kalai, E. (1981). Preplay negotiations and the prisoner’s dilemma. Mathematical Social Sciences, 1(4), 375–379.CrossRefGoogle Scholar
  7. Maskin, E. (1999). Nash equilibrium and welfare optimality. The Review of Economic Studies, 66(1), 23–38.CrossRefGoogle Scholar
  8. Masuda, T., Okano, Y., & Saijo, T. (2014). The minimum approval mechanism implements the efficient public good allocation theoretically and experimentally. Games and Economic Behavior, 83, 73–85.CrossRefGoogle Scholar
  9. Moore, J., & Repullo, R. (1988). Subgame perfect implementation. Econometrica: Journal of the Econometric Society, 56(5), 1191–1220.Google Scholar
  10. Saijo, T., & Shen, J. (2018). Mate choice mechanism for solving a quasi-dilemma. Journal of Behavioral and Experimental Economics, 72, 1–8. CrossRefGoogle Scholar
  11. Saijo, T., Masuda, T., & Yamakawa, T. (2018). Approval mechanism to solve prisoner's dilemma: Comparison with Varian's compensation mechanism. Social Choice and Welfare, 51(1), 65–77.Google Scholar
  12. Saijo, T., Masuda, T. & Yamakawa, T. (2018). Approval mechanism to solve prisoner’s dilemma: Comparison with Varian’s compensation mechanism. Social Choice and Welfare (published on line).Google Scholar
  13. Varian, H. R. (1994). A solution to the problem of externalities when agents are well-informed. American Economic Review, 84(5), 1278–1293.Google Scholar

Copyright information

© Springer Nature Switzerland AG 2019

Authors and Affiliations

  • Tatsuyoshi Saijo
    • 1
    • 2
    • 3
  1. 1.Research Institute for Humanity and NatureKyotoJapan
  2. 2.Research Institute for Future DesignKochi University of TechnologyEikokujiJapan
  3. 3.Tokyo Foundation of Policy ResearchRoppongiJapan

Personalised recommendations