Evolutionary Implementation of Efficient Networks

Yoshimasa Katayama (), Satoshi Nakada () and Taishi Sassano ()
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Yoshimasa Katayama: Graduate School of Economics, The University of Tokyo
Satoshi Nakada: Graduate School of Economics, Hitotsubashi University
Taishi Sassano: Department of Economics, Duke University

Economics Bulletin, 2017, vol. 37, issue 3, 2149-2161

Abstract: This paper considers an evolutionary implementation problem of efficient outcomes (Sandholm 2007) in the context of network formation. We assume that players interact with each other in the long run, facing stochastic mistakes. Under no constraints, resulting networks can be inefficient in general. Our main result shows that we can construct a Pigouvian-type taxation mechanism such that the resulting networks are efficient with probability one in the long run.

Keywords: Evolutionary implementation; efficient network; network potentials; pairwise stability; stochastic evolution (search for similar items in EconPapers)
JEL-codes: C7 D8 (search for similar items in EconPapers)
Date: 2017-09-27
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