The Castle on the Hill
A simple example of a stochastic games with irreversibility is studied and it is shown that the folk theorem fails in a robust way. In this game of Castle on the Hill, for a broad range of discount factors, including those close to me, equilibrium is unique. Moreover, the equilibrium for large discount factors is Pareto dominated by the equilibrium for low discount factors. A unique cyclic equilibrium is also possible for intermediate ranges of discount factors. (Copyright: Elsevier)
Year of publication: |
2000
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Authors: | Levine, David |
Published in: |
Review of Economic Dynamics. - Society for Economic Dynamics - SED. - Vol. 3.2000, 2, p. 330-337
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Publisher: |
Society for Economic Dynamics - SED |
Saved in:
Online Resource
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