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Designing stable mechanisms for economic environments

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  • Healy, Paul J.

    ()
    (Department of Economics, Ohio State University)

  • Mathevet, Laurent

    ()
    (Department of Economics, University of Texas)

Abstract

We study the design of mechanisms that implement Lindahl or Walrasian allocations and whose Nash equilibria are dynamically stable for a wide class of adaptive dynamics. We argue that supermodularity is not a desirable stability criterion in this mechanism design context, focusing instead on contractive mechanisms. We provide necessary and sufficient conditions for a mechanism to Nash implement Lindahl or Walrasian allocations, show that these conditions are inconsistent with the contraction property when message spaces are one-dimensional, and then show how to use additional dimensions to achieve dynamic stability while gaining budget balance out of equilibrium.

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Bibliographic Info

Article provided by Econometric Society in its journal Theoretical Economics.

Volume (Year): 7 (2012)
Issue (Month): 3 (September)
Pages:

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Handle: RePEc:the:publsh:898

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Related research

Keywords: Mechanism design; implementation; stability; learning;

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References

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Cited by:
  1. Masuda, Takehito & Okano, Yoshitaka & Saijo, Tatsuyoshi, 2014. "The minimum approval mechanism implements the efficient public good allocation theoretically and experimentally," Games and Economic Behavior, Elsevier, vol. 83(C), pages 73-85.
  2. repec:dpr:wpaper:0874 is not listed on IDEAS
  3. Takehito Masuda & Yoshitaka Okano & Tatsuyoshi Saijo, 2013. "The Minimum Approval Mechanism Implements the Efficient Public Good Allocation Theoretically and Experimentally," ISER Discussion Paper 0874r, Institute of Social and Economic Research, Osaka University, revised Sep 2013.
  4. Matt Van Essen, 2012. "A note on the stability of Chen’s Lindahl mechanism," Social Choice and Welfare, Springer, vol. 38(2), pages 365-370, February.
  5. Matt Van Essen, 2012. "Information complexity, punishment, and stability in two Nash efficient Lindahl mechanisms," Review of Economic Design, Springer, vol. 16(1), pages 15-40, March.

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