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Implementation in Adaptive Better-Response Dynamics

We study the classic implementation problem under the behavioral assumption that agents myopically adjust their actions in the direction of better-responses within a given institution. We offer results both under complete and incomplete information. First, we show that a necessary condition for assymptotically stable implementation is a small variation of (Maskin) monotonicity, which we call quasimonotonicity. Under standard assumptions in economic environments, we also provide a mechanism for Nash implementation which has good dynamic properties if the rule is quasimonotonic. Thus, quasimonotonicity is both necessary and almost sufficient for assymptotically stable implementation. Under incomplete information, incentive compatibility is necessary for any kind of stable implementation in our sense, while Bayesian quasimonotonicity is necessary for assymptotically stable implementation. Both conditions are also essentially sufficient for assymptotically stable implementation. We then tighten the assumptions on preferences and mutation processes and provide mechanisms for stochastically stable implementation under more permissive conditions on social choice rules.

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Paper provided by Brown University, Department of Economics in its series Working Papers with number 2007-10.

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Date of creation: 2007
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Handle: RePEc:bro:econwp:2007-10
Contact details of provider: Postal: Department of Economics, Brown University, Providence, RI 02912

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  1. Antonio Cabrales, . "Adaptive Dynamics and the Implementation Problem with Complete Information," ELSE working papers 009, ESRC Centre on Economics Learning and Social Evolution.
  2. repec:fth:calaec:6-98 is not listed on IDEAS
  3. Antonio Cabrales & Giovanni Ponti, 2000. "Implementation, Elimination Of Weakly Dominated Strategies And Evolutionary Dynamics," Working Papers. Serie AD 2000-18, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  4. Drew Fudenberg & David K. Levine, 1996. "The Theory of Learning in Games," Levine's Working Paper Archive 624, David K. Levine.
  5. Matthew O. Jackson, 2001. "A crash course in implementation theory," Social Choice and Welfare, Springer, vol. 18(4), pages 655-708.
  6. Jorgen W. Weibull, 1997. "Evolutionary Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262731215, June.
  7. BERGIN, James & LIPMAN, Bart, 1994. "Evolution with State-Dependent Mutations," CORE Discussion Papers 1994055, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  8. Postlewaite, Andrew & Schmeidler, David, 1986. "Implementation in differential information economies," Journal of Economic Theory, Elsevier, vol. 39(1), pages 14-33, June.
  9. Eliaz, K., 1999. "Fault Tolerant Implementation," Papers 21-99, Tel Aviv.
  10. Sjostrom, T., 1991. "Implementation in Undominated Nash Equilibria without Integer Games," Papers 491, Stockholm - International Economic Studies.
  11. M. Kandori & G. Mailath & R. Rob, 1999. "Learning, Mutation and Long Run Equilibria in Games," Levine's Working Paper Archive 500, David K. Levine.
  12. Sandholm, William H, 2002. "Evolutionary Implementation and Congestion Pricing," Review of Economic Studies, Wiley Blackwell, vol. 69(3), pages 667-89, July.
  13. Eric Maskin & Tomas Sjostrom, 2001. "Implementation Theory," Economics Working Papers 0006, Institute for Advanced Study, School of Social Science.
  14. Roberto Serrano, 2003. "The Theory of Implementation of Social Choice Rules," Working Papers 2003-19, Brown University, Department of Economics.
  15. Palfrey, Thomas R & Srivastava, Sanjay, 1989. "Implementation with Incomplete Information in Exchange Economies," Econometrica, Econometric Society, vol. 57(1), pages 115-34, January.
  16. Roberto Serrano & Rajiv Vohra, 2002. "A Characterization of Virtual Bayesian Implementation," Economics Working Papers 0028, Institute for Advanced Study, School of Social Science.
  17. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
  18. Jackson, Matthew O, 1991. "Bayesian Implementation," Econometrica, Econometric Society, vol. 59(2), pages 461-77, March.
  19. Palfrey, Thomas R., 2002. "Implementation theory," Handbook of Game Theory with Economic Applications, in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 3, chapter 61, pages 2271-2326 Elsevier.
  20. Eric Maskin, 1998. "Nash Equilibrium and Welfare Optimality," Harvard Institute of Economic Research Working Papers 1829, Harvard - Institute of Economic Research.
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