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To Err is Human: Implementation in Quantal Response Equilibria

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Author Info

  • Norovsambuu Tumennasan

    ()
    (Department of Economics and Business, Aarhus University, Denmark)

Abstract

We study the classical implementation problem when players are prone to make mis- takes. To capture the idea of mistakes, Logit Quantal Response Equilibrium (LQRE) is used, and we consider a case in which players are almost rational, i.e., the sophisti- cation level of players, delta, approaches infinity. We show that quasimonotonicity, a small variation of Maskin Monotonicity, and no worst alternative conditions are necessary for restricted Limiting LQRE (LLQRE) implementation. Moreover, these conditions are sufficient for both restricted and unrestricted LLQRE implementations if there are at least three players and each player's worst alternative set is constant over all states.

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Bibliographic Info

Paper provided by School of Economics and Management, University of Aarhus in its series Economics Working Papers with number 2011-11.

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Length: 32
Date of creation: 12 Sep 2011
Date of revision:
Handle: RePEc:aah:aarhec:2011-11

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Web page: http://www.econ.au.dk/afn/

Related research

Keywords: implementation; mechanisms; bounded rationalitym; quantal response equilibria;

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References

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  1. Antonio Cabrales & Giovanni Ponti, 1997. "Implementation, elimination of weakly dominated strategies and evolutionary dynamics," Economics Working Papers 221, Department of Economics and Business, Universitat Pompeu Fabra.
  2. Cabrales, Antonio & Serrano, Roberto, 2011. "Implementation in adaptive better-response dynamics: Towards a general theory of bounded rationality in mechanisms," Games and Economic Behavior, Elsevier, vol. 73(2), pages 360-374.
  3. Jackson, Matthew O., 1999. "A Crash Course in Implementation Theory," Working Papers 1076, California Institute of Technology, Division of the Humanities and Social Sciences.
  4. Roberto Serrano, 2003. "The Theory of Implementation of Social Choice Rules," Working Papers 2003-19, Brown University, Department of Economics.
  5. Jacob K. Goeree & Charles A. Holt & Thomas R. Palfrey, 2000. "Quantal Response Equilibrium and Overbidding in Private-Value Auctions," Virginia Economics Online Papers 345, University of Virginia, Department of Economics.
  6. Antonio Cabrales, . "Adaptive Dynamics and the Implementation Problem with Complete Information," ELSE working papers 009, ESRC Centre on Economics Learning and Social Evolution.
  7. Goeree, Jacob & Palfrey, Thomas & Rogers, Brian & McKelvey, Richard, 2004. "Self-correcting Information Cascades," Working Papers 1197, California Institute of Technology, Division of the Humanities and Social Sciences.
  8. C. Monica Capra, 1999. "Anomalous Behavior in a Traveler's Dilemma?," American Economic Review, American Economic Association, vol. 89(3), pages 678-690, June.
  9. William H. Sandholm, 2005. "Negative Externalities and Evolutionary Implementation," Review of Economic Studies, Oxford University Press, vol. 72(3), pages 885-915.
  10. Maskin, Eric, 1999. "Nash Equilibrium and Welfare Optimality," Review of Economic Studies, Wiley Blackwell, vol. 66(1), pages 23-38, January.
  11. Jacob K Goeree & Charles A Holt, 2004. "Ten Little Treasures of Game Theory and Ten Intuitive Contradictions," Levine's Working Paper Archive 618897000000000900, David K. Levine.
  12. Kfir Eliaz, 2002. "Fault Tolerant Implementation," Review of Economic Studies, Oxford University Press, vol. 69(3), pages 589-610.
  13. Eliaz, Kfir, 2002. "Fault Tolerant Implementation," Review of Economic Studies, Wiley Blackwell, vol. 69(3), pages 589-610, July.
  14. Tumennasan, Norovsambuu, 2013. "To err is human: Implementation in quantal response equilibria," Games and Economic Behavior, Elsevier, vol. 77(1), pages 138-152.
  15. Anderson, Simon P. & Goeree, Jacob K. & Holt, Charles A., 2001. "Minimum-Effort Coordination Games: Stochastic Potential and Logit Equilibrium," Games and Economic Behavior, Elsevier, vol. 34(2), pages 177-199, February.
  16. Jackson, Matthew O, 1992. "Implementation in Undominated.Strategies: A Look at Bounded Mechanisms," Review of Economic Studies, Wiley Blackwell, vol. 59(4), pages 757-75, October.
  17. Eric Maskin & Tomas Sjostrom, 2001. "Implementation Theory," Economics Working Papers 0006, Institute for Advanced Study, School of Social Science.
  18. repec:bla:restud:v:74:y:2007:i:3:p:733-762 is not listed on IDEAS
  19. Matsushima, Hitoshi, 1988. "A new approach to the implementation problem," Journal of Economic Theory, Elsevier, vol. 45(1), pages 128-144, June.
  20. Simon P. Anderson & Jacob K. Goeree & Charles A. Holt, 1998. "Rent Seeking with Bounded Rationality: An Analysis of the All-Pay Auction," Journal of Political Economy, University of Chicago Press, vol. 106(4), pages 828-853, August.
  21. Abreu, Dilip & Sen, Arunava, 1991. "Virtual Implementation in Nash Equilibrium," Econometrica, Econometric Society, vol. 59(4), pages 997-1021, July.
  22. repec:fth:calaec:6-98 is not listed on IDEAS
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Citations

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Cited by:
  1. Renou, Ludovic & Schlag, Karl H., 2011. "Implementation in minimax regret equilibrium," Games and Economic Behavior, Elsevier, vol. 71(2), pages 527-533, March.
  2. Norovsambuu Tumennasan, 2011. "To Err is Human: Implementation in Quantal Response Equilibria," Economics Working Papers 2011-11, School of Economics and Management, University of Aarhus.

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