IDEAS home Printed from https://ideas.repec.org/p/ebg/heccah/1015.html
   My bibliography  Save this paper

Approximate Implementation in Markovian Environments

Author

Listed:
  • Renou , Ludovic

    ()

  • Tomala, Tristan

    ()

Abstract

This paper considers dynamic implementation problems with evolving private information (according to Markov processes). A social choice function is approximately implementable if there exists a dynamic mechanism such that the social choice function is implemented by an arbitrary large number of times with arbitrary high probability in every communication equilibrium. We show that if a social choice function is strictly efficient in the set of social choice functions that satisfy an undetectable condition, then it is approximately implementable. We revisit the classical monopolistic screening problem and show that the monopolist can extract the full surplus in almost all periods with arbitrary high probability.

Suggested Citation

  • Renou , Ludovic & Tomala, Tristan, 2013. "Approximate Implementation in Markovian Environments," Les Cahiers de Recherche 1015, HEC Paris.
  • Handle: RePEc:ebg:heccah:1015
    as

    Download full text from publisher

    File URL: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2267373
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Radner, Roy, 1985. "Repeated Principal-Agent Games with Discounting," Econometrica, Econometric Society, vol. 53(5), pages 1173-1198, September.
    2. Radner, Roy, 1981. "Monitoring Cooperative Agreements in a Repeated Principal-Agent Relationship," Econometrica, Econometric Society, vol. 49(5), pages 1127-1148, September.
    3. Renault, Jérôme & Solan, Eilon & Vieille, Nicolas, 2013. "Dynamic sender–receiver games," Journal of Economic Theory, Elsevier, pages 502-534.
    4. Juan F. Escobar & Juuso Toikka, 2013. "Efficiency in Games With Markovian Private Information," Econometrica, Econometric Society, vol. 81(5), pages 1887-1934, September.
    5. Jihong Lee & Hamid Sabourian, 2011. "Efficient Repeated Implementation," Econometrica, Econometric Society, vol. 79(6), pages 1967-1994, November.
    6. Glynn, Peter W. & Ormoneit, Dirk, 2002. "Hoeffding's inequality for uniformly ergodic Markov chains," Statistics & Probability Letters, Elsevier, pages 143-146.
    7. Matsushima, Hitoshi, 1988. "A new approach to the implementation problem," Journal of Economic Theory, Elsevier, vol. 45(1), pages 128-144, June.
    8. Mailath George J. & Matthews Steven A. & Sekiguchi Tadashi, 2002. "Private Strategies in Finitely Repeated Games with Imperfect Public Monitoring," The B.E. Journal of Theoretical Economics, De Gruyter, pages 1-23.
    9. Matsushima, Hitoshi & Miyazaki, Koichi & Yagi, Nobuyuki, 2010. "Role of linking mechanisms in multitask agency with hidden information," Journal of Economic Theory, Elsevier, vol. 145(6), pages 2241-2259, November.
    10. Fudenberg, Drew & Levine, David I & Maskin, Eric, 1994. "The Folk Theorem with Imperfect Public Information," Econometrica, Econometric Society, pages 997-1039.
    11. Townsend, Robert M, 1982. "Optimal Multiperiod Contracts and the Gain from Enduring Relationships under Private Information," Journal of Political Economy, University of Chicago Press, vol. 90(6), pages 1166-1186, December.
    12. Matthew O Jackson & Hugo F Sonnenschein, 2007. "Overcoming Incentive Constraints by Linking Decisions -super-1," Econometrica, Econometric Society, vol. 75(1), pages 241-257, January.
    13. Abreu, Dilip & Sen, Arunava, 1991. "Virtual Implementation in Nash Equilibrium," Econometrica, Econometric Society, vol. 59(4), pages 997-1021, July.
    14. Lehrer, E, 1989. "Lower Equilibrium Payoffs in Two-Player Repeated Games with Non-observable Actions," International Journal of Game Theory, Springer;Game Theory Society, pages 57-89.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Juan I. Block & David K. Levine, 2016. "Codes of conduct, private information and repeated games," International Journal of Game Theory, Springer;Game Theory Society, pages 971-984.
    2. Bruno Sultanum, 2017. "Financial Fragility and Over-the-counter Markets," 2017 Meeting Papers 1122, Society for Economic Dynamics.
    3. Kris James Mitchener & Gary Richardson, 2016. "Network Contagion and Interbank Amplification during the Great Depression," NBER Working Papers 22074, National Bureau of Economic Research, Inc.
    4. Juan F. Escobar & Gastón Llanes, 2015. "Cooperation Dynamic in Repeated Games of Adverse Selection," Documentos de Trabajo 311, Centro de Economía Aplicada, Universidad de Chile.
    5. Chandrasekher, Madhav, 2015. "Unraveling in a repeated moral hazard model with multiple agents," Theoretical Economics, Econometric Society.
    6. Bruno Sultanum, 2014. "Financial fragility and over-the-counter markets," 2014 Papers psu420, Job Market Papers.
    7. Mezzetti, Claudio & Renou, Ludovic, 2017. "Repeated Nash implementation," Theoretical Economics, Econometric Society.

    More about this item

    Keywords

    implementation; Markov Process; undetectability; efficiency;

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ebg:heccah:1015. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Antoine Haldemann). General contact details of provider: http://edirc.repec.org/data/hecpafr.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.