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Adaptive Dynamics and the Implementation Problem with Complete Information

  • Cabrales, Antonio

This paper studies the equilibrating process of several implementation mecha-nisms 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 implemen-tation with refined equilibrium concepts have claimed that the mechanisms they propose are simple and implement everything (in contrast with the canoni-cal mechanism). The fact that some of these simple mechanisms have unstable equilibria suggests that these statements should be interpreted with some caution. Key Words: Implementation; Bounded Rationality; Evolutionary dynamics; Mechanisms.

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Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 86 (1999)
Issue (Month): 2 (June)
Pages: 159-184

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Handle: RePEc:eee:jetheo:v:86:y:1999:i:2:p:159-184
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622869

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  10. Matthew, Jackson O. & Palfrey, Thomas R. & Srivastava, Sanjay., 1990. "Undominated Nash Implementation in Bounded Mechanism," Working Papers 754, California Institute of Technology, Division of the Humanities and Social Sciences.
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  24. Samuelson, Larry & Zhang, Jianbo, 1992. "Evolutionary stability in asymmetric games," Journal of Economic Theory, Elsevier, vol. 57(2), pages 363-391, August.
  25. Abreu, Dilip & Matsushima, Hitoshi, 1992. "Virtual Implementation in Iteratively Undominated Strategies: Complete Information," Econometrica, Econometric Society, vol. 60(5), pages 993-1008, September.
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