Engineering for Institutional Design : Building up a new field

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Engineering for Institutional Design is intended to develop a new field that aims at designing "real" and "robust" mechanisms or institutions using theory, experiment and survey. We propose a new concept called Secure Implementation as a fundamental framework for institutional design. Theorists usually presume behavioral principles at their own discretion. However, we cannot predetermine the principles of human behaviors. For this reason, we allow them to behave and choose from Nash to dominant strategies. One of the most famous mechanisms in the provision of public good is the Pivotal mechanism that is not securely implementable. We use human subjects to check out the performance between secure and non-secure mechanisms and find that the performance of secure mechanisms are significantly better than the Pivotal mechanism's one.Our "Are Japanese Spiteful?" project is to understand human behavior beyond the traditional selfish individual framework. When a public good is non-excludable, we prove that it is impossible to design a mechanism in which everyone has incentive to participate. We conduct experiments using Japanese, Chinese and American subjects and find that Japanese are spiteful in the following sense. Some Japanese subjects do not care about losing a little amount of payoff if it is possible that the other subjects lose quite a large amount of payoff. We name this as spiteful behavior. Furthermore, we find that human brain does not respond well to spiteful behavior, but respond quite well to altruistic behavior using fMRI. We also conjecture that spiteful behavior would be one of the fundamental human behaviors.We also conduct survey of environmental consciousness using Shanghai people. We find that elder people care about environment relative to younger people. This finding is rather different from the previous literature. Furthermore, we identify the strategies when a game is repeated finitely from both theoretical and experimental methods.