Implementation of the Walrasian correspondence: the boundary problem

Olivier Bochet ()

No 2005060, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

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, 1999) is violated for allocations at the boundary of the feasible set. We derive an impossibility result showing that it is in fact not implementable in any solution concept. Next, we construct a sequential mechanism based on price-allocation announcements that fits the very description of Walrasian Equilibrium. Imposing an additional domain restriction, we show that it fully implements the Walrasian correspondence in subgame perfect and strong subgame perfect equilibrium. We thus take care of the boundary problem that was prominent in the Nash implementation literature.

Keywords: Walrasian equilibrium; preference reversal; double implementation; subgame perfect equilibrium; strong subgame perfect equilibrium (search for similar items in EconPapers)
Date: 2005-09
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Related works:
Journal Article: Implementation of the Walrasian correspondence: the boundary problem (2007)
Working Paper: Implementation of the Walrasian correspondence: the boundary problem (2005)
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