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Implementation, elimination of weakly dominated strategies and evolutionary dynamics

Mostra el registre parcial de l'element Cabrales, Antonio Ponti, Giovanni
dc.contributor.other Universitat Pompeu Fabra. Departament d'Economia i Empresa 2017-07-26T12:07:56Z 2017-07-26T12:07:56Z 1997-02-01
dc.identifier.citation Review of Economic Dynamics, 3, (2000), pp. 247-282
dc.description.abstract This paper is concerned with the realism of mechanisms that implement social choice functions in the traditional sense. Will agents actually play the equilibrium assumed by the analysis? As an example, we study the convergence and stability properties of Sj\"ostr\"om's (1994) mechanism, on the assumption that boundedly rational players find their way to equilibrium using monotonic learning dynamics and also with fictitious play. This mechanism implements most social choice functions in economic environments using as a solution concept the iterated elimination of weakly dominated strategies (only one round of deletion of weakly dominated strategies is needed). There are, however, many sets of Nash equilibria whose payoffs may be very different from those desired by the social choice function. With monotonic dynamics we show that many equilibria in all the sets of equilibria we describe are the limit points of trajectories that have completely mixed initial conditions. The initial conditions that lead to these equilibria need not be very close to the limiting point. Furthermore, even if the dynamics converge to the ``right'' set of equilibria, it still can converge to quite a poor outcome in welfare terms. With fictitious play, if the agents have completely mixed prior beliefs, beliefs and play converge to the outcome the planner wants to implement.
dc.language.iso eng
dc.relation.ispartofseries Economics and Business Working Papers Series; 221
dc.rights L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons
dc.title Implementation, elimination of weakly dominated strategies and evolutionary dynamics
dc.type info:eu-repo/semantics/workingPaper 2017-07-23T02:03:06Z
dc.subject.keyword implementation
dc.subject.keyword bounded rationality
dc.subject.keyword evolutionary dynamics
dc.subject.keyword mechanisms
dc.subject.keyword Microeconomics
dc.rights.accessRights info:eu-repo/semantics/openAccess

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