Abstract
Restricting attention to economic environments, we study implementation under perturbed better-response dynamics (BRD). A social choice function (SCF) is implementable in stochastically stable strategies of perturbed BRD whenever the only outcome supported by the stochastically stable strategies of the perturbed process is the outcome prescribed by the SCF. For uniform mistakes, we show that any ε-secure and strongly efficient SCF is implementable when there are at least five agents. Extensions to incomplete information environments are also obtained.
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We thank Jeff Ely, Takashi Kunimoto, Eric Maskin, Stephen Morris, Olivier Tercieux, Norov Tumennasan and Fernando Vega-Redondo for helpful conversations and encouragement. The comments of the Guest Editor, Matthew Jackson, and an anonymous referee greatly helped to improve the paper. We gratefully acknowledge the financial support from Spain’s Ministry of Science and Innovation under grants CONSOLIDER INGENIO 2010 CSD2006-0016 (both), and ECO2009-10531 (Cabrales). Serrano thanks CEMFI in Madrid for its hospitality.
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Open Access This article is distributed under the terms of the Creative Commons Attribution 2.0 International License (https://creativecommons.org/licenses/by/2.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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Cabrales, A., Serrano, R. Stochastically stable implementation. SERIEs 3, 59–72 (2012). https://doi.org/10.1007/s13209-011-0062-7
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DOI: https://doi.org/10.1007/s13209-011-0062-7