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Evolutionary Implementation of Efficient Networks

Author

Listed:
  • Yoshimasa Katayama

    (Graduate School of Economics, The University of Tokyo)

  • Satoshi Nakada

    (Graduate School of Economics, Hitotsubashi University)

  • Taishi Sassano

    (Department of Economics, Duke University)

Abstract

This paper considers an evolutionary implementation problem of efficient outcomes (Sandholm 2007) in the context of network formation. We assume that players interact with each other in the long run, facing stochastic mistakes. Under no constraints, resulting networks can be inefficient in general. Our main result shows that we can construct a Pigouvian-type taxation mechanism such that the resulting networks are efficient with probability one in the long run.

Suggested Citation

  • Yoshimasa Katayama & Satoshi Nakada & Taishi Sassano, 2017. "Evolutionary Implementation of Efficient Networks," Economics Bulletin, AccessEcon, vol. 37(3), pages 2149-2161.
    • Handle: RePEc:ebl:ecbull:eb-17-00276
    as

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    References listed on IDEAS

    as
    1. Sandholm, William H., 2007. "Pigouvian pricing and stochastic evolutionary implementation," Journal of Economic Theory, Elsevier, vol. 132(1), pages 367-382, January.
    2. Furusawa, Taiji & Konishi, Hideo, 2007. "Free trade networks," Journal of International Economics, Elsevier, vol. 72(2), pages 310-335, July.
    3. Kandori, Michihiro & Mailath, George J & Rob, Rafael, 1993. "Learning, Mutation, and Long Run Equilibria in Games," Econometrica, Econometric Society, vol. 61(1), pages 29-56, January.
    4. Jackson, Matthew O. & Zenou, Yves, 2015. "Games on Networks," Handbook of Game Theory with Economic Applications,, Elsevier.
    5. Chih-Sheng Hsieh & Michael D. König & Xiaodong Liu, 2012. "Network formation with local complements and global substitutes: the case of R&D networks," ECON - Working Papers 217, Department of Economics - University of Zurich, revised Feb 2017.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Evolutionary implementation; efficient network; network potentials; pairwise stability; stochastic evolution;
    All these keywords.

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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