Advanced Search
MyIDEAS: Login

Implementation, Elimination of Weakly Dominated Strategies and Evolutionary Dynamics

Contents:

Author Info

  • Antonio Cabrales

    (Universitat Pompeu Fabra and ELSE)

  • Giovanni Ponti

    (Universidad de Alicante and ELSE)

Abstract

This paper studies convergence and stability properties of Sjostrom's (1994) mechanism, under the assumption that boundedly rational players find their way to equilibrium using monotonic evolutionary dynamics and best-reply dynamics. This mechanism implements most social choice functions in economic environments using as a solution concept one round of deletion of weakly dominated strategies and one round of deletion of strictly dominated strategies. However, there are other sets of Nash equilibrium, whose payoffs may be very different from those desired by the social choice function. With monotonic dynamics, all these sets of equilibrium contain limit points of the evolutionary dynamics. Furthermore, even if the dynamics converge to the "right" set of equilibria (i.e., the one which contains the solution of the mechanism), it may converge to an equilibrium which is worse in welfare terms. In contrast with this result, any interior solution of the best-reply dynamics converges to the equilibrium whose outcome the planner desires. (Copyright: Elsevier)

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://dx.doi.org/10.1006/redy.1999.0082
File Function: Full text
Download Restriction: Access to full texts is restricted to ScienceDirect subscribers and ScienceDirect institutional members. See http://www.sciencedirect.com/ for details.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics.

Volume (Year): 3 (2000)
Issue (Month): 2 (April)
Pages: 247-282

as in new window
Handle: RePEc:red:issued:v:3:y:2000:i:2:p:247-282

Contact details of provider:
Postal: Review of Economic Dynamics Academic Press Editorial Office 525 "B" Street, Suite 1900 San Diego, CA 92101
Fax: 1-314-444-8731
Email:
Web page: http://www.EconomicDynamics.org/review.htm
More information through EDIRC

Order Information:
Email:
Web: http://www.EconomicDynamics.org/RED17.htm

Related research

Keywords:

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Schlag, Karl H., 1998. "Why Imitate, and If So, How?, : A Boundedly Rational Approach to Multi-armed Bandits," Journal of Economic Theory, Elsevier, vol. 78(1), pages 130-156, January.
  2. Vega-Redondo, Fernando, 1989. "Implementation of Lindahl equilibrium: an integration of the static and dynamic approaches," Mathematical Social Sciences, Elsevier, vol. 18(3), pages 211-228, December.
  3. Nachbar, J H, 1990. ""Evolutionary" Selection Dynamics in Games: Convergence and Limit Properties," International Journal of Game Theory, Springer, vol. 19(1), pages 59-89.
  4. Antonio Cabrales & Gary Charness & Luis Corchón, 1998. "An experiment on Nash implementation," Economics Working Papers 300, Department of Economics and Business, Universitat Pompeu Fabra.
  5. Jorgen W. Weibull, 1997. "Evolutionary Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262731215, December.
  6. Gale, John & Binmore, Kenneth G. & Samuelson, Larry, 1995. "Learning to be imperfect: The ultimatum game," Games and Economic Behavior, Elsevier, vol. 8(1), pages 56-90.
  7. Cressman, R., 1996. "Evolutionary Stability in the Finitely Repeated Prisoner 's Dilemma Game," Journal of Economic Theory, Elsevier, vol. 68(1), pages 234-248, January.
  8. repec:fth:calaec:16-97 is not listed on IDEAS
  9. Matthew 0. Jackson, 1989. "Implementation in Undominated Strategies - A Look at Bounded Mechanisms," Discussion Papers 833, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  10. CHEN, Hsiao-Ch. & FRIEDMAN, J.W. & THISSE, Jacques-Francois, 1996. "Boundedly Rational Nash Equilibrium: A Probabilistic Choice Approach," CORE Discussion Papers 1996044, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  11. T. Borgers & R. Sarin, 2010. "Learning Through Reinforcement and Replicator Dynamics," Levine's Working Paper Archive 380, David K. Levine.
  12. Binmore, K. & Samuelson, L. & Gale, J., 1993. "Learning to be Imperfect: The Ultimatum Game," Working papers 9325, Wisconsin Madison - Social Systems.
  13. Moore, John & Repullo, Rafael, 1988. "Subgame Perfect Implementation," Econometrica, Econometric Society, vol. 56(5), pages 1191-1220, September.
  14. Binmore, K. & Samuelson, L., 1997. "Evolutionary Drift and Equilibrium Selection," Working papers 9729r, Wisconsin Madison - Social Systems.
  15. Leslie McFarland-Marx & Jeroen M. Swinkels, 1993. "Order Independence for Iterated Weak Dominance," Discussion Papers 1040, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  16. Matthew, Jackson O. & Palfrey, Thomas R. & Srivastava, Sanjay., 1990. "Undominated Nash Implementation in Bounded Mechanism," Working Papers 754, California Institute of Technology, Division of the Humanities and Social Sciences.
  17. Abreu Dilip & Matsushima Hitoshi, 1994. "Exact Implementation," Journal of Economic Theory, Elsevier, vol. 64(1), pages 1-19, October.
  18. Hofbauer, Josef & Weibull, Jörgen W., 1995. "Evolutionary Selection against Dominated Strategies," Working Paper Series 433, Research Institute of Industrial Economics.
  19. A. Roth & I. Er’ev, 2010. "Learning in Extensive Form Games: Experimental Data and Simple Dynamic Models in the Intermediate Run," Levine's Working Paper Archive 387, David K. Levine.
  20. Guth, Werner & Schmittberger, Rolf & Schwarze, Bernd, 1982. "An experimental analysis of ultimatum bargaining," Journal of Economic Behavior & Organization, Elsevier, vol. 3(4), pages 367-388, December.
  21. T. Börgers, 2010. "Weak Dominance and Approximate Common Knowledge," Levine's Working Paper Archive 378, David K. Levine.
  22. Cabrales, Antonio, 1999. "Adaptive Dynamics and the Implementation Problem with Complete Information," Journal of Economic Theory, Elsevier, vol. 86(2), pages 159-184, June.
  23. Cooper, Russell & DeJong, Douglas V. & Forsythe, Robert & Ross, Thomas W., 1996. "Cooperation without Reputation: Experimental Evidence from Prisoner's Dilemma Games," Games and Economic Behavior, Elsevier, vol. 12(2), pages 187-218, February.
  24. Theodore Groves & John Ledyard, 1976. "Optimal Allocation of Public Goods: A Solution to the 'Free Rider Problem'," Discussion Papers 144, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  25. K. Schlag, 2010. "Why Imitate, and if so, How? Exploring a Model of Social Evolution," Levine's Working Paper Archive 454, David K. Levine.
  26. Giovanni Ponti, . "Cycles Of Learning In The Centipede Game," ELSE working papers 024, ESRC Centre on Economics Learning and Social Evolution.
  27. Samuelson, L. & Zhang, J., 1990. "Evolutionary Stability In Symmetric Games," Working papers 90-24, Wisconsin Madison - Social Systems.
  28. De Trenqualye, Pierre, 1988. "Stability of the Groves and Ledyard mechanism," Journal of Economic Theory, Elsevier, vol. 46(1), pages 164-171, October.
  29. repec:fth:louvco:9644 is not listed on IDEAS
  30. Tang, Fang-Fang, 1996. "Anticipatory Learning in Two-Person Games: An Experimental Study, Part II. Learning," Discussion Paper Serie B 363, University of Bonn, Germany.
  31. R. Cressman, K.H. Schlag, 1995. "The Dynamic (In)Stability of Backwards Induction," Discussion Paper Serie B 347, University of Bonn, Germany.
  32. Matsui, Akihiko, 1992. "Best response dynamics and socially stable strategies," Journal of Economic Theory, Elsevier, vol. 57(2), pages 343-362, August.
  33. I. Gilboa & A. Matsui, 2010. "Social Stability and Equilibrium," Levine's Working Paper Archive 534, David K. Levine.
  34. Sjostrom, T., 1991. "Implementation in Undominated Nash Equilibria without Integer Games," Papers 491, Stockholm - International Economic Studies.
  35. Mookherjee, Dilip & Sopher, Barry, 1997. "Learning and Decision Costs in Experimental Constant Sum Games," Games and Economic Behavior, Elsevier, vol. 19(1), pages 97-132, April.
  36. Fudenberg Drew & Kreps David M., 1993. "Learning Mixed Equilibria," Games and Economic Behavior, Elsevier, vol. 5(3), pages 320-367, July.
  37. Walker, Mark, 1984. "A simple auctioneerless mechanism with Walrasian properties," Journal of Economic Theory, Elsevier, vol. 32(1), pages 111-127, February.
  38. Dekel, Eddie & Fudenberg, Drew, 1990. "Rational behavior with payoff uncertainty," Journal of Economic Theory, Elsevier, vol. 52(2), pages 243-267, December.
  39. Dunia López-Pintado & Giovanni Ponti, 2003. "Solomon'S Dilemma: An Experimental Study On Dynamic Implementation," Working Papers. Serie AD 2003-11, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  40. Walker, Mark, 1981. "A Simple Incentive Compatible Scheme for Attaining Lindahl Allocations," Econometrica, Econometric Society, vol. 49(1), pages 65-71, January.
  41. Samuelson, Larry & Zhang, Jianbo, 1992. "Evolutionary stability in asymmetric games," Journal of Economic Theory, Elsevier, vol. 57(2), pages 363-391, August.
  42. de Trenqualye, Pierre, 1989. "Stable implementation of Lindahl allocations," Economics Letters, Elsevier, vol. 29(4), pages 291-294.
  43. Jordan, J. S., 1986. "Instability in the implementation of Walrasian allocations," Journal of Economic Theory, Elsevier, vol. 39(2), pages 301-328, August.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Roberto Serrano, 2003. "The Theory of Implementation of Social Choice Rules," Economics Working Papers 0033, Institute for Advanced Study, School of Social Science.
  2. Antonio Cabrales & Roberto Serrano, 2007. "Implementation in adaptive better-response dynamics," Working Papers 2007-16, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales.
  3. Tumennasan, Norovsambuu, 2013. "To err is human: Implementation in quantal response equilibria," Games and Economic Behavior, Elsevier, vol. 77(1), pages 138-152.
  4. David K. Levine & Aldo Rustichini, 2000. "Introduction," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 3(2), pages 213-215, April.
  5. Cason, Timothy N. & Saijo, Tatsuyoshi & Sjostrom, Tomas & Yamato, Takehiko, 2006. "Secure implementation experiments: Do strategy-proof mechanisms really work?," Games and Economic Behavior, Elsevier, vol. 57(2), pages 206-235, November.
  6. Dunia López-Pintado & Giovanni Ponti, 2003. "Solomon'S Dilemma: An Experimental Study On Dynamic Implementation," Working Papers. Serie AD 2003-11, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  7. Jordi Brandts & Antonio Cabrales & Gary Charness, 2007. "Forward induction and entry deterrence: an experiment," Economic Theory, Springer, vol. 33(1), pages 183-209, October.
  8. Maskin, Eric & Sjostrom, Tomas, 2001. "Implementation Theory," Working Papers 5-01-1, Pennsylvania State University, Department of Economics.
  9. Sandholm,W.H., 2001. "Negative externalities and evolutionary implementation," Working papers 15, Wisconsin Madison - Social Systems.
  10. David K Levine & Aldo Rustichini, 2000. "Introduction: The Dynamic Games Special Issue," Levine's Working Paper Archive 2127, David K. Levine.
  11. Galbiati, Marco, 2008. "Fair divisions as attracting Nash equilibria of simple games," Economics Letters, Elsevier, vol. 100(1), pages 72-75, July.
  12. Sandholm,W.H., 1999. "Evolutionary implementation and congestion pricing," Working papers 38, Wisconsin Madison - Social Systems.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:red:issued:v:3:y:2000:i:2:p:247-282. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christian Zimmermann).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.