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Stochastically stable implementation

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  • Cabrales, Antonio
  • Serrano, Roberto

Abstract

Restricting attention to economic environments, we study implementation under perturbed better-response dynamics (BRD). A social choice function (SCF) is implementable in stochastically stable strategies of perturbed BRD whenever the only outcome supported by the stochastically stable strategies of the perturbed process is the outcome prescribed by the SCF. For uniform mistakes, we show that any ε-secure and strongly efficient SCF is implementable when there are at least five agents. Extensions to incomplete information environments are also obtained

Suggested Citation

  • Cabrales, Antonio & Serrano, Roberto, 2011. "Stochastically stable implementation," UC3M Working papers. Economics we1105, Universidad Carlos III de Madrid. Departamento de Economía.
    • Handle: RePEc:cte:werepe:we1105
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    References listed on IDEAS

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    1. Dekel, Eddie & Fudenberg, Drew & Levine, David K., 2004. "Learning to play Bayesian games," Games and Economic Behavior, Elsevier, vol. 46(2), pages 282-303, February.
    2. Glenn Ellison, 2000. "Basins of Attraction, Long-Run Stochastic Stability, and the Speed of Step-by-Step Evolution," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 67(1), pages 17-45.
    3. Serrano, Roberto & Vohra, Rajiv, 2005. "A characterization of virtual Bayesian implementation," Games and Economic Behavior, Elsevier, vol. 50(2), pages 312-331, February.
    4. Roberto Serrano & Antonio Cabrales, 2007. "Implementation in Adaptive Better-Response Dynamics," Working Papers 2007-10, Brown University, Department of Economics.
    5. Bergin, James & Lipman, Barton L, 1996. "Evolution with State-Dependent Mutations," Econometrica, Econometric Society, vol. 64(4), pages 943-956, July.
    6. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
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    Cited by:

    1. Alexander L. Brown & Rodrigo A. Velez, 2019. "Empirical bias and efficiency of alpha-auctions: experimental evidence," Papers 1905.03876, arXiv.org, revised Jul 2020.
    2. Ortner, Juan, 2015. "Direct implementation with minimally honest individuals," Games and Economic Behavior, Elsevier, vol. 90(C), pages 1-16.
    3. 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.
    4. Saran, Rene, 2016. "Bounded depths of rationality and implementation with complete information," Journal of Economic Theory, Elsevier, vol. 165(C), pages 517-564.

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    More about this item

    Keywords

    Robust implementation;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation

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