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Adaptive dynamics and the implementation problem with complete information
Cabrales, Antonio
Universitat Pompeu Fabra. Departament d'Economia i Empresa
This paper studies the equilibrating process of several implementationmechanisms using naive adaptive dynamics. We show that the dynamics convergeand are stable, for the canonical mechanism of implementation in Nash equilibrium.In this way we cast some doubt on the criticism of ``complexity'' commonlyused against this mechanism. For mechanisms that use more refined equilibrium concepts,the dynamics converge but are not stable. Some papers in the literatureon implementation with refined equilibrium concepts have claimed that themechanisms they propose are ``simple'' and implement ``everything'' (incontrast with the canonical mechanism). The fact that some of these ``simple''mechanisms have unstable equilibria suggests that these statements shouldbe interpreted with some caution.
2005-09-15
Microeconomics
implementation
bounded rationality
evolutionary dynamics
mechanisms
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