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Approximate Implementation in Markovian Environments

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  • 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," HEC Research Papers Series 1015, HEC Paris.
    • Handle: RePEc:ebg:heccah:1015
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    References listed on IDEAS

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    1. Jihong Lee & Hamid Sabourian, 2011. "Efficient Repeated Implementation," Econometrica, Econometric Society, vol. 79(6), pages 1967-1994, November.
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    Cited by:

    1. Escobar, Juan F. & Llanes, Gastón, 2018. "Cooperation dynamics in repeated games of adverse selection," Journal of Economic Theory, Elsevier, vol. 176(C), pages 408-443.
    2. Juan I. Block & David K. Levine, 2016. "Codes of conduct, private information and repeated games," International Journal of Game Theory, Springer;Game Theory Society, vol. 45(4), pages 971-984, November.
    3. Sultanum, Bruno, 2018. "Financial fragility and over-the-counter markets," Journal of Economic Theory, Elsevier, vol. 177(C), pages 616-658.
    4. Āzacis, Helmuts & Vida, Péter, 2019. "Repeated implementation: A practical characterization," Journal of Economic Theory, Elsevier, vol. 180(C), pages 336-367.
    5. ,, 2015. "Unraveling in a repeated moral hazard model with multiple agents," Theoretical Economics, Econometric Society, vol. 10(1), January.
    6. Mezzetti, Claudio & Renou, Ludovic, 2017. "Repeated Nash implementation," Theoretical Economics, Econometric Society, vol. 12(1), January.

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    More about this item

    Keywords

    implementation; Markov Process; undetectability; efficiency;
    All these keywords.

    JEL classification:

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

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