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

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Author Info
Giovanni Ponti (Universidad de Alicante)

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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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Publisher Info
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
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Publication status: Published by Ivie
Handle: RePEc:ivi:wpasad:2000-08

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Find related papers by JEL classification:
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy-Making and Implementation
D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information

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  1. McKelvey, Richard D & Palfrey, Thomas R, 1992. "An Experimental Study of the Centipede Game," Econometrica, Econometric Society, vol. 60(4), pages 803-36, July. [Downloadable!] (restricted)
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  3. repec:att:wimass:199325 is not listed on IDEAS
  4. 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. [Downloadable!] (restricted)
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  5. 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. [Downloadable!] (restricted)
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  7. Gibbard, Allan, 1973. "Manipulation of Voting Schemes: A General Result," Econometrica, Econometric Society, vol. 41(4), pages 587-601, July. [Downloadable!] (restricted)
  8. Jorgen W. Weibull, 1997. "Evolutionary Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262731215.
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  10. Giovanni Ponti, . "Splitting the Baby in Two: How to Solve Solomon's Dilemma when Agents are Boundedly Rational," University of California at Santa Barbara, Economics Working Paper Series 20-98, Department of Economics, UC Santa Barbara.
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  11. 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.
  12. Matsui, Akihiko, 1992. "Best response dynamics and socially stable strategies," Journal of Economic Theory, Elsevier, vol. 57(2), pages 343-362, August. [Downloadable!] (restricted)
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  15. 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.
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  18. Perry, Motty & Reny, Philip J., 1999. "A General Solution to King Solomon's Dilemma," Games and Economic Behavior, Elsevier, vol. 26(2), pages 279-285, January. [Downloadable!] (restricted)
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  1. Giovanni Ponti, 2000. "Splitting The Baby In Two: How To Solve Solomon'S Dilemma When Agents Are Boundedly Rational," Working Papers. Serie AD 2000-08, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie). [Downloadable!]
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