Creator: Bassetto, Marco Series: Working paper (Federal Reserve Bank of Minneapolis. Research Department) Number: 624 Abstract:
How should a government use the power to commit to ensure a desirable equilibrium outcome? In this paper, I show a misleading aspect of what has become a standard approach to this question, and I propose an alternative. I show that the complete description of an optimal (indeed, of any) policy scheme requires outlining the consequences of paths that are often neglected. The specification of policy along those paths is crucial in determining which schemes implement a unique equilibrium and which ones leave room for multiple equilibria that depend on the expectations of the private sector.
Stichwort: Government strategy, Implementation, Commitment, and Competitive equilibrium Fach: E61 - Policy Objectives; Policy Designs and Consistency; Policy Coordination, F34 - International Lending and Debt Problems, and C73 - Stochastic and Dynamic Games; Evolutionary Games; Repeated Games
Creator: Green, Edward J. and Lin, Ping Series: Working paper (Federal Reserve Bank of Minneapolis. Research Department) Number: 576 Abstract:
In a finite-trader version of the Diamond-Dybvig (1983) model, the symmetric, ex-ante efficient allocation is implementable by a direct mechanism (i.e., each trader announces the type of his own ex-post preference) in which truthful revelation is the strictly dominant strategy for each trader. When the model is modified by formalizing the sequential-service constraint (cf. Wallace, 1988), the truth-telling equilibrium implements the symmetric, ex-ante efficient allocation with respect to iterated elimination of strictly dominated strategies.
Stichwort: Implementation, Financial intermediation, and Bank run Fach: G21 - Banks; Depository Institutions; Micro Finance Institutions; Mortgages and D82 - Asymmetric and Private Information; Mechanism Design
Creator: Allen, Beth Series: Staff report (Federal Reserve Bank of Minneapolis. Research Department) Number: 226 Abstract:
This paper surveys implementation theory when players have incomplete or asymmetric information, especially in economic environments. After the basic problem is introduced, the theory of implementation is summarized. Some coalitional considerations for implementation problems are discussed. For economies with asymmetric information, cooperative games based on incentive compatibility constraints or Bayesian incentive compatible mechanisms are derived and examined.
Stichwort: Mechanisms, Incentive Compatibility, Bayesian-Nash Revelation Principle, Incomplete Information, Cooperative Games, Core, Implementation, Asymmetric Information, and Nontransferable Utility Fach: C72 - Noncooperative Games, D51 - Exchange and Production Economies, D82 - Asymmetric and Private Information; Mechanism Design, C71 - Cooperative Games, and D71 - Social Choice; Clubs; Committees; Associations