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Sequential implementation without commitment

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  • Takashi Hayashi
  • Michele Lombardi

Abstract

In a finite-horizon intertemporal setting, in which society needs to decide and enforce a socially optimal outcome in each period without being able to commit to future ones, the paper examines problems of implementing dynamic social choice processes. A dynamic social choice process is a social choice function (SCF) that maps every admissible state into a socially optimal outcome on the basis of past outcomes. A SCF is sequentially implementable if there exists a sequence of mechanisms (with observed actions and with simultaneous moves) such that for each possible state of the envi- ronment, each (pure strategy) subgame perfect (Nash-)equilibrium of games played sequentially by the same individuals in that state generates the outcome prescribed by the SCF for that state, at every history. The paper identifies necessary conditions for SCFs to be sequentially implemented, sequential decomposability sequential Maskin monotonicity, and shows that they are also sufficient under auxiliary conditions when there are three or more individuals. It provides an account of welfare implications of the sequential implementability in the contexts of sequential trading and sequential voting.

Suggested Citation

  • Takashi Hayashi & Michele Lombardi, 2016. "Sequential implementation without commitment," Working Papers 2016_14, Business School - Economics, University of Glasgow.
  • Handle: RePEc:gla:glaewp:2016_14
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    References listed on IDEAS

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    1. Palfrey, Thomas R & Srivastava, Sanjay, 1991. "Nash Implementation Using Undominated Strategies," Econometrica, Econometric Society, vol. 59(2), pages 479-501, March.
    2. Moore, John & Repullo, Rafael, 1990. "Nash Implementation: A Full Characterization," Econometrica, Econometric Society, vol. 58(5), pages 1083-1099, September.
    3. Martin J. Osborne & Ariel Rubinstein, 1994. "A Course in Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262650401, December.
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