Implementation of the Walrasian Correspondence: the Boundary Problem
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Publisher DOI
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.
Date Issued
2007
Publication Type
Article
Language(s)
en
Additional Credits
Journal
International journal of game theory
Publisher
Springer
ISSN
0020-7276
Access(Rights)
open.access