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Approximate Implementation in Markovian Environments

Listed author(s):
  • Renou , Ludovic

    ()

  • Tomala, Tristan

    ()

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.

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Paper provided by HEC Paris in its series Les Cahiers de Recherche with number 1015.

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Length: 51 pages
Date of creation: 21 Jul 2013
Handle: RePEc:ebg:heccah:1015
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HEC Paris, 78351 Jouy-en-Josas cedex, France

Web page: http://www.hec.fr/

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  1. 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.
  2. Radner, Roy, 1985. "Repeated Principal-Agent Games with Discounting," Econometrica, Econometric Society, vol. 53(5), pages 1173-1198, September.
  3. Radner, Roy, 1981. "Monitoring Cooperative Agreements in a Repeated Principal-Agent Relationship," Econometrica, Econometric Society, vol. 49(5), pages 1127-1148, September.
  4. Renault, Jérôme & Solan, Eilon & Vieille, Nicolas, 2013. "Dynamic sender–receiver games," Journal of Economic Theory, Elsevier, vol. 148(2), pages 502-534.
  5. Juan F. Escobar & Juuso Toikka, 2013. "Efficiency in Games With Markovian Private Information," Econometrica, Econometric Society, vol. 81(5), pages 1887-1934, 09.
  6. Jihong Lee & Hamid Sabourian, 2011. "Efficient Repeated Implementation," Econometrica, Econometric Society, vol. 79(6), pages 1967-1994, November.
  7. Glynn, Peter W. & Ormoneit, Dirk, 2002. "Hoeffding's inequality for uniformly ergodic Markov chains," Statistics & Probability Letters, Elsevier, vol. 56(2), pages 143-146, January.
  8. 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.
  9. Matthew O Jackson & Hugo F Sonnenschein, 2007. "Overcoming Incentive Constraints by Linking Decisions -super-1," Econometrica, Econometric Society, vol. 75(1), pages 241-257, 01.
  10. Fudenberg, Drew & Levine, David I & Maskin, Eric, 1994. "The Folk Theorem with Imperfect Public Information," Econometrica, Econometric Society, vol. 62(5), pages 997-1039, September.
  11. Matsushima, Hitoshi, 1988. "A new approach to the implementation problem," Journal of Economic Theory, Elsevier, vol. 45(1), pages 128-144, June.
  12. 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, vol. 2(1), pages 1-23, June.
  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, vol. 18(1), pages 57-89.
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