Template-Type: ReDIF-Paper 1.0
Author-Name: Jens Leth Hougaard
Author-Name-First: Jens Leth
Author-Name-Last: Hougaard
Author-Email: jlh21@nyu.edu
Author-Email: jlh@ifro.ku.dk
Author-Workplace-Name: NYU-Shanghai, China
Author-Workplace-Name: Department of Food and Resource Economics, University of Copenhagen
Author-Name: Mich Tvede
Author-Name-First: Mich
Author-Name-Last: Tvede
Author-Email: m.tvede@uea.ac.uk
Author-Workplace-Name: University of East Anglia
Title: Implementation of Optimal Connection Networks
Abstract: We consider a connection networks model. Every agent has a demand in the form of pairs of locations she wants connected, and a willingness to pay for connectivity. A planner aims at implementing a welfare maximizing network and allocating the resulting cost, but information is asymmetric: agents are fully informed, the planner is ignorant. The options for full implementation in Nash and strong Nash equilibria are studied. We simplify strategy sets without changing the set of Nash implementable correspondences. We show the correspondence of consisting of welfare maximizing networks and individually rational cost allocations is implementable. We construct a minimal Nash implementable desirable solution in the set of upper hemi-continuous and Nash implementable solutions. It is not possible to implement solutions such a the Shapley value unless we settle for partial implementation.
Length: 20 pages
Creation-Date: 2020-07
File-URL: http://okonomi.foi.dk/workingpapers/WPpdf/WP2020/IFRO_WP_2020_06.pdf
File-Format: Application/pdf
Number: 2020/06
Classification-JEL: C70, C72, D71, D85
Keywords: Connection networks; Welfare maximization; Nash Implementation; Strong Nash Implementation
Handle: RePEc:foi:wpaper:2020_06