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Adaptive dynamics and the implementation problem with complete information

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  • Antonio Cabrales

Abstract

This paper studies the equilibrating process of several implementation mechanisms using naive adaptive dynamics. We show that the dynamics converge and are stable, for the canonical mechanism of implementation in Nash equilibrium. In this way we cast some doubt on the criticism of ``complexity'' commonly used against this mechanism. For mechanisms that use more refined equilibrium concepts, the dynamics converge but are not stable. Some papers in the literature on implementation with refined equilibrium concepts have claimed that the mechanisms they propose are ``simple'' and implement ``everything'' (in contrast with the canonical mechanism). The fact that some of these ``simple'' mechanisms have unstable equilibria suggests that these statements should be interpreted with some caution.

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File URL: http://www.econ.upf.edu/docs/papers/downloads/179.pdf
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Bibliographic Info

Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 179.

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Date of creation: Jul 1996
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Handle: RePEc:upf:upfgen:179

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Web page: http://www.econ.upf.edu/

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Keywords: Implementation; bounded rationality; evolutionary dynamics; mechanisms;

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