Implementation of the Walrasian correspondence: The boundary problem

Research output: Contribution to journalArticle

Abstract

Consider exchange economies in which preferences are continuous, convex and strongly monotonic. It is well known that the Walrasian correspondence is not Nash implementable: Maskin monotonicity (Maskin in Rev Econ Stud 66:23-38, 1999) is violated for Walrasian allocations on the boundary of the feasible set. We derive an impossibility result showing that the Walrasian correspondence is in fact not implementable in any of the solution concepts considered in the implementation literature. Next, imposing an additional domain restriction, we construct a sequential mechanism that doubly implements the Walrasian correspondence in subgame perfect and strong subgame perfect equilibrium. The mechanism is based on price-allocation announcements, and it fits the very description of Walrasian equilibrium. We thus take care of the boundary problem that was prominent in the Nash implementation literature.

Original languageEnglish (US)
Pages (from-to)301-316
Number of pages16
JournalInternational Journal of Game Theory
Volume36
Issue number2
DOIs
StatePublished - Oct 1 2007

Fingerprint

Boundary Problem
Correspondence
Walrasian Equilibrium
Subgame Perfect Equilibrium
Exchange Economy
Solution Concepts
Monotonic
economy
Monotonicity
Restriction
literature

Keywords

  • Double implementation
  • Implementability
  • Justified sensitivity
  • Strong subgame perfect equilibrium
  • Subgame perfect equilibrium
  • Walrasian equilibrium

ASJC Scopus subject areas

  • Statistics and Probability
  • Mathematics (miscellaneous)
  • Social Sciences (miscellaneous)
  • Economics and Econometrics
  • Statistics, Probability and Uncertainty

Cite this

Implementation of the Walrasian correspondence : The boundary problem. / Bochet, Olivier.

In: International Journal of Game Theory, Vol. 36, No. 2, 01.10.2007, p. 301-316.

Research output: Contribution to journalArticle

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