Splitting The Baby In Two: How To Solve Solomon'S Dilemma When Agents Are Boundedly Rational

Ponti, Giovanni (2000) Splitting The Baby In Two: How To Solve Solomon'S Dilemma When Agents Are Boundedly Rational. [Working Paper]. p. 17. Working Papers. Serie AD (2000-08).

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We study the dynamic implementation of the first-best for King Solomon's Dilemma, on the assumption that boundedly rational players find their way to equilibrium using monotonic evolutionary dynamics, and also with best-reply dynamics. We find that, although the mechanisms proposed by the literature are dynamically implementable with best-reply dynamics, the same does not hold when monotonic dynamics are considered. To solve this problem, we propose an alternative mechanism, whose game-form is still implementable in the traditional sense. However, it is also dynamically implementable, as every interior path of the adjustment pro-cesses we consider converges to the first-best, which is also asymptotically stable.

Item Type:Report / Paper (Working Paper)
Research documents and activity classification:Working Papers > Refereed Working Papers / of international relevance
Divisions:Department of Business and Management
Additional Information:The definitive version of the paper has been published as "Splitting the baby in two: solving Solomon's dilemma with boundedly rational agents" in Journal of Evolutionary Economics, Vol. 10(4), Pages 449-455, 2000.
Uncontrolled Keywords:Solomon’s Dilemma, Implementation Theory, Evolutionary Dynamics.
MIUR Scientific Area:Area 13 - Economics and Statistics > SECS-P/01 Political Economy
Deposited By:Maria Teresa Nistico
Deposited On:16 Dec 2010 15:14
Last Modified:23 Apr 2013 15:03

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