Journal Article

Nash Equilibrium and Welfare Optimality*

Eric Maskin

in The Review of Economic Studies

Published on behalf of Review of Economic Studies Ltd

Volume 66, issue 1, pages 23-38
Published in print January 1999 | ISSN: 0034-6527
Published online January 1999 | e-ISSN: 1467-937X | DOI: http://dx.doi.org/10.1111/1467-937X.00076
Nash Equilibrium and Welfare Optimality*

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If A is a set of social alternatives, a social choice rule (SCR) assigns a subset of A to each potential profile of individuals' preferences over A, where the subset is interpreted as the set of “welfare optima” A game form (or “mechanism”) implements the social choice rule if, for any potential profile of preferences, (i) any welfare optimum can arise as a Nash equilibrium of the game form (implying, in particular, that a Nash equilibrium exists) and, (ii) all Nash equilibria are welfare optimal. The main result of this paper establishes that any SCR that satisfies two properties—monotonicity and no veto power—can be implemented by a game form if there are three or more individuals. The proof is constructive.

Journal Article.  0 words. 

Subjects: Economics

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