Approximate Implementation in Markovian Environments

HEC Paris Research Paper No. ECO/SCD-2013-1015

Posted: 20 May 2013 Last revised: 21 Nov 2013

See all articles by Ludovic Renou

Ludovic Renou

Queen Mary University of London

Tristan Tomala

HEC Paris - Economics & Decision Sciences

Date Written: July 21, 2013

Abstract

This paper considers dynamic implementation problems with evolving private information (according to Markov processes). A social choice function is approximately implementable if there exists a dynamic mechanism such that the social choice function is implemented by an arbitrary large number of times with arbitrary high probability in every communication equilibrium. We show that if a social choice function is strictly efficient in the set of social choice functions that satisfy an undetectable condition, then it is approximately implementable. We revisit the classical monopolistic screening problem and show that the monopolist can extract the full surplus in almost all periods with arbitrary high probability.

Keywords: implementation, Markov Process, undetectability, efficiency

JEL Classification: C7

Suggested Citation

Renou, Ludovic and Tomala, Tristan, Approximate Implementation in Markovian Environments (July 21, 2013). HEC Paris Research Paper No. ECO/SCD-2013-1015, Available at SSRN: https://ssrn.com/abstract=2267373 or http://dx.doi.org/10.2139/ssrn.2267373

Ludovic Renou (Contact Author)

Queen Mary University of London ( email )

Mile End Rd
Mile End Road
London, London E1 4NS
United Kingdom

Tristan Tomala

HEC Paris - Economics & Decision Sciences ( email )

1 rue de la Liberation
Paris, 78351
France

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