Efficient incentives with social preferences.

We explore mechanism design with outcome‐based social preferences. Agents' social preferences and private payoffs are all subject to asymmetric information. We assume quasi‐linear utility and independent types. We show how the asymmetry of information about agents' social preferences can be operationalized to satisfy agents' participation constraints. Our main result is a possibility result for groups of at least three agents: Any such group can resolve any given allocation problem with an ex post budget‐balanced mechanism that is Bayesian incentive‐compatible, interim individually rational, and ex post Pareto‐efficient. [ABSTRACT FROM AUTHOR]