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2008 Documento de Trabajo #255

Implementation with renegotiation when preferences and feasible sets are state dependent

In this paper, we present a model of implementation where infeasible allocations are converted into feasible ones through a process of renegotiation that is represented by a reversion function. We describe the maximal set of Social Choice Correspondences that can be implemented in Nash Equilibrium in a class of reversion functions that punish agents for infeasibilities. This is used to study the implementation of the Walrasian Correspondence and several axiomatic solutions to problems of bargaining and taxation.

JEL Classification Numbers: C72, D60, D78.

Luis Corchón
Matteo Triossi

Keywords: Implementation., Reversion Function, State Dependent Feasible Sets