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Socio-legal Systems and Implementation of the Nash Solution in Debreu-Hurwicz Equilibrium

Claus-Jochen Haake () and Walter Trockel ()
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Claus-Jochen Haake: Paderborn University
Walter Trockel: Bielefeld University

No 140, Working Papers CIE from Paderborn University, CIE Center for International Economics

Abstract: In this article we combine Debreu's (1952) social system with Hurwicz's (1994, 2008) ideas of embedding a "desired" game form into a "natural" game form that includes all feasible behavior, even if it is "illegal" according to the desired form. For the resulting socio-legal system we extend Debreu's concepts of a social system and its social equilibria to a socio-legal system with its Debreu-Hurwicz equilibria. We build on a more general version of social equilibrium due to Shafer and Sonnenschein (1975) that also generalizes the dc-mechanism of Koray and Yildiz (2018) which relates implementation via mechanisms with implementation via rights structures as introduced by Sertel (2001). In the second part we apply and illustrate these new concepts via an application in the narrow welfarist framework of two-person cooperative bargaining. There we provide in a socio-legal system based on Nash's demand game an implementation of the Nash bargaining solution in Debreu-Hurwicz equilibrium.

Keywords: socio-legal systems; implementation; social systems; generalized games; Nash demand game (search for similar items in EconPapers)
JEL-codes: C72 C78 D02 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2021-04
New Economics Papers: this item is included in nep-gth
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