Maskin meets Abreu and Matsushima

Yi-Chun Chen (), Takashi Kunimoto, Yifei Sun () and Siyang Xiong
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Yi-Chun Chen: Department of Economics and Risk Management Institute, National University of Singapore
Yifei Sun: Department of Economics, University of International Business and Economics

Theoretical Economics, 2022, vol. 17, issue 4

Abstract: The theory of full implementation has been criticized for using integer/modulo games which admit no equilibrium (Jackson (1992)). To address the critique, we revisit the classical Nash implementation problem due to Maskin (1977, 1999) but allow for the use of lotteries and monetary transfers as in Abreu and Matsushima (1992, 1994). We unify the two well-established but somewhat orthogonal approaches in full implementation theory. We show that Maskin monotonicity is a necessary and sufficient condition for (exact) mixed-strategy Nash implementation by a finite mechanism. In contrast to previous papers, our approach possesses the following features: finite mechanisms (with no integer or modulo game) are used; mixed strategies are handled explicitly; neither undesirable outcomes nor transfers occur in equilibrium; the size of transfers can be made arbitrarily small; and our mechanism is robust to information perturbations.

Keywords: Complete information; full implementation; information perturbations; Maskin monotonicity; mixed-strategy Nash equilibrium; social choice function (search for similar items in EconPapers)
JEL-codes: C72 D78 D82 (search for similar items in EconPapers)
Date: 2022-11-22
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Citations: View citations in EconPapers (5)

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