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Efficiency in correlated equilibrium

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  • RAY, I.

Abstract

We analyze all the existing efficiency criteria of mechanism design literature in the context of correlated equilibrium: ex-post (classical) efficiency, strong interim efficiency, weak interim (incentive) efficiency, posterior (informational) efficiency. The natural criterion of interior efficiency is introduced where obedience is not only Nash equilibrium but also Pareto efficient among the set of Nash equilibria in the induced extended game. All of these sets are compared to each other, analyzing several examples; the issue of (non)existence is also discussed. We characterize our efficient subsets of the set of correlated equilibria in terms of the existing notions of coalitionproofness in this context and show for two person games some notion of efficiency is the necessary and sufficient condition for the (corresponding) coalition-proofness. We discuss our concepts in non-canonical correlated devices also and prove the revelation principle in the context of ex-post, strong and weak interim efficiency, though it fails, even for two-player games, in the context of posterior and interior efficiency.
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Suggested Citation

  • Ray, I., 1996. "Efficiency in correlated equilibrium," LIDAM Reprints CORE 1243, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvrp:1243
    DOI: 10.1016/S0165-4896(96)00819-0
    Note: In : Mathematical Social Sciences, 32, 157-178, 1996
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    Cited by:

    1. Ozdogan, Ayca & Saglam, Ismail, 2021. "Correlated equilibrium under costly disobedience," Mathematical Social Sciences, Elsevier, vol. 114(C), pages 98-104.
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    3. Indrajit Ray, 2002. "Multiple Equilibrium Problem and Non-Canonical Correlation Devices," Working Papers 2002-24, Brown University, Department of Economics.

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    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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