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Splitting The Baby In Two: How To Solve Solomon'S Dilemma When Agents Are Boundedly Rational

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  • Giovanni Ponti

    (Universidad de Alicante)

Abstract

We study the dynamic implementation of the first-best for King Solomon's Dilemma, on the assumption that boundedly rational players find their way to equilibrium using monotonic evolutionary dynamics, and also with best-reply dynamics. We find that, although the mechanisms proposed by the literature are dynamically implementable with best-reply dynamics, the same does not hold when monotonic dynamics are considered. To solve this problem, we propose an alternative mechanism, whose game-form is still implementable in the traditional sense. However, it is also dynamically implementable, as every interior path of the adjustment pro-cesses we consider converges to the first-best, which is also asymptotically stable.

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File URL: http://www.ivie.es/downloads/docs/wpasad/wpasad-2000-08.pdf
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Paper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 2000-08.

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Length: 17 pages
Date of creation: Mar 2000
Date of revision:
Publication status: Published by Ivie
Handle: RePEc:ivi:wpasad:2000-08

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  1. Jorgen W. Weibull, 1997. "Evolutionary Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262731215, December.
  2. 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.
  3. Jorg Oechssler & Karl Schlag, 1997. "An Evolutionary Analysis of Bagwell's Example," Game Theory and Information 9704001, EconWPA, revised 11 Apr 1997.
  4. Selten, Reinhard, 1983. "Evolutionary stability in extensive two-person games," Mathematical Social Sciences, Elsevier, vol. 5(3), pages 269-363, September.
  5. Ponti, Giovanni, 2000. "Cycles of Learning in the Centipede Game," Games and Economic Behavior, Elsevier, vol. 30(1), pages 115-141, January.
  6. Perry, M. & Reny, P.J., 1995. "A general solution to king Solomon's dilemma," Discussion Paper 1995-81, Tilburg University, Center for Economic Research.
  7. repec:fth:calaec:20-98 is not listed on IDEAS
  8. Fudenberg, D. & Kreps, D.M., 1992. "Learning Mixed Equilibria," Working papers 92-13, Massachusetts Institute of Technology (MIT), Department of Economics.
  9. Sjostrom Tomas, 1994. "Implementation in Undominated Nash Equilibria without Integer Games," Games and Economic Behavior, Elsevier, vol. 6(3), pages 502-511, May.
  10. 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.
  11. Matsui, Akihiko, 1992. "Best response dynamics and socially stable strategies," Journal of Economic Theory, Elsevier, vol. 57(2), pages 343-362, August.
  12. Abreu, Dilip & Matsushima, Hitoshi, 1992. "Virtual Implementation in Iteratively Undominated Strategies: Complete Information," Econometrica, Econometric Society, vol. 60(5), pages 993-1008, September.
  13. Binmore,K. & McCarthy,J. & Ponti,G. & ..., 1999. "A backward induction experiment," Working papers 34, Wisconsin Madison - Social Systems.
  14. McKelvey, Richard D & Palfrey, Thomas R, 1992. "An Experimental Study of the Centipede Game," Econometrica, Econometric Society, vol. 60(4), pages 803-36, July.
  15. 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.
  16. 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.
  17. John H. Kagel & A. Alexander Elbittar, 2004. "King Solomon's Dilemma: A Laboratory Study on Implementation," Econometric Society 2004 North American Winter Meetings 592, Econometric Society.
  18. repec:att:wimass:9325 is not listed on IDEAS
  19. Gibbard, Allan, 1973. "Manipulation of Voting Schemes: A General Result," Econometrica, Econometric Society, vol. 41(4), pages 587-601, July.
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