Optimal Equilibria of the Best Shot Game
AbstractWe consider any network environment in which the âbest shot gameâ is played. This is the case where the possible actions are only two for every node (0 and 1), and the best response for a node is 1 if and only if all her neighbors play 0. A natural application of the model is one in which the action 1 is the purchase of a good, which is locally a public good, in the sense that it will be available also to neighbors. This game will typically exhibit a great multiplicity of equilibria. Imagine a social planner whose scope is to find an optimal equilibrium, i.e. one in which the number of nodes playing 1 is minimal. To find such an equilibrium is a very hard task for any non-trivial network architecture. We propose an implementable mechanism that, in the limit of infinite time, reaches an optimal equilibrium, even if this equilibrium and even the network structure is unknown to the social planner.
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Bibliographic InfoArticle provided by Association for Public Economic Theory in its journal Journal of Public Economic Theory.
Volume (Year): 13 (2011)
Issue (Month): 6 (December)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=1097-3923
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Other versions of this item:
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
- C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
- D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
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