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Robustness of subgame perfect implementation

Author

Listed:
  • Eccles, Peter

    () (Universidad Carlos III de Madrid)

  • Wegner, Nora

    () (Bank of England)

Abstract

In this paper we consider the robustness of subgame perfect implementation in situations when the preferences of players are almost perfectly known. More precisely, we consider a class of information perturbations where in each state of the world players know their own preferences with certainty and receive almost perfectly informative signals about the preferences of other players. We show that implementations using two-stage sequential move mechanisms are always robust under this class of restricted perturbations, while those using more stages are often not.

Suggested Citation

  • Eccles, Peter & Wegner, Nora, 2016. "Robustness of subgame perfect implementation," Bank of England working papers 601, Bank of England.
    • Handle: RePEc:boe:boeewp:0601
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    References listed on IDEAS

    as
    1. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January.
    2. Moore, John & Repullo, Rafael, 1988. "Subgame Perfect Implementation," Econometrica, Econometric Society, vol. 56(5), pages 1191-1220, September.
    3. Philippe Aghion & Drew Fudenberg & Richard Holden & Takashi Kunimoto & Olivier Tercieux, 2012. "Subgame-Perfect Implementation Under Information Perturbations," The Quarterly Journal of Economics, Oxford University Press, vol. 127(4), pages 1843-1881.
    4. Bergin, James & Sen, Arunava, 1998. "Extensive Form Implementation in Incomplete Information Environments," Journal of Economic Theory, Elsevier, vol. 80(2), pages 222-256, June.
    5. Bester, Helmut & Krähmer, Daniel, 2012. "Exit options in incomplete contracts with asymmetric information," Journal of Economic Theory, Elsevier, vol. 147(5), pages 1947-1968.
    6. Abreu Dilip & Matsushima Hitoshi, 1994. "Exact Implementation," Journal of Economic Theory, Elsevier, vol. 64(1), pages 1-19, October.
    7. Serrano, Roberto & Vohra, Rajiv, 2010. "Multiplicity of mixed equilibria in mechanisms: A unified approach to exact and approximate implementation," Journal of Mathematical Economics, Elsevier, vol. 46(5), pages 775-785, September.
    8. Baliga, Sandeep, 1999. "Implementation in Economic Environments with Incomplete Information: The Use of Multi-Stage Games," Games and Economic Behavior, Elsevier, vol. 27(2), pages 173-183, May.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Implementation; subgame perfect equilibrium; robustness;

    JEL classification:

    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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