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Adaptive Dynamics and the Implementation Problem with Complete Information

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URI: http://hdl.handle.net/10016/3510
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CABRALES_WPUPF_1996_179_CA.pdf (255.24 KB)
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1996-07
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Universidad Pompeu Fabra. Departamento de Economia y Empresa
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This paper studies the equilibrating process of several implementation mechanisms using naive adaptive dynamics. We show that the dynamics converge and are stable, for the canonical mechanism of implementation in Nash equilibrium. In this way we cast some doubt on the criticism of "complexity" commonly used against this mechanism. For mechanisms that use more re ned equilibrium concepts, the dynamics converge but are not stable. Some papers in the literature on implementation with re ned equilibrium concepts have claimed that the mechanisms they propose are "simple" and implement "everything" (in contrast with the canoni- cal mechanism). The fact that some of these "simple" mechanisms have unstable equilibria suggests that these statements should be interpreted with some caution.
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