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The Theory of Collusion Under Financial Constraints

Yasuda, Yosuke - 2007

This paper analyzes how financial constraints affect equilibrium payoffs and behaviors in repeated Cournot games. Modifying minmax and feasible payoffs, we derive the folk theorem under financial constraints. Our theorem illustrates that introducing financial constraints shrinks the set of...

Persistent link: https://www.econbiz.de/10012731589

The Role of Consumer's Risk Aversion on Price Rigidity

Alves, Sergio Afonso Lago - 2006

This paper aims at contributing to the research agenda on the sources of price stickiness, showing that the adoption of nominal price rigidity may be an optimal firms' reaction to the consumers' behavior, even if firms have no adjustment costs. With regular broadly accepted assumptions on...

Persistent link: https://www.econbiz.de/10012734827

A Study of Inaction in Investment Games Via the Early Exercise Premium Representation

Ruffino, Doriana - 2009

This paper examines strategic investment in the context of a duopolistic continuous-time real options game. Our contribution is twofold, economic and methodological. The former is the recognition that, under fixed costs of investment and time-to-build, the firm pays a fraction of the implicit...

Persistent link: https://www.econbiz.de/10012721572

Entry Patterns Over the Product Life Cycle

Gutiérrez Arnáiz, Oscar - 2009

We study a new real options model of oligopolistic entry based on empirical evidence of demand for a new product growing over time and eventually falling. Yet, firms do not know ex ante when this can occur, which creates incentives to update information by delaying irreversible entry. By...

Persistent link: https://www.econbiz.de/10012721949

Lumps and Clusters in Duopolistic Investment Games : An Early Exercise Premium Approach

Ruffino, Doriana - 2007

This paper investigates strategic investment policies in a duopolistic continuous-time real options game. Our contribution is twofold, economic and methodological. The former is the recognition that, under fixed costs of investment and time-to-build, a firm's exercise of its capital-replacement...

Persistent link: https://www.econbiz.de/10012731571

Open Loop Equilibria and Perfect Competition in Option Exercise Games

Back, Kerry E. - 2009

The investment boundaries defined by Grenadier (2002) for an oligopoly investment game determine equilibria in open loop strategies. As closed loop strategies, they are not equilibria, because any firm by investing sooner can preempt the investments of other firms and expropriate the growth...

Persistent link: https://www.econbiz.de/10012720593

When the Punishment Must Fit the Crime : Remarks on the Failure of Simple Penal Codes in Extensive-Form Games

Mailath, George J. - 2004

In repeated normal-form games, simple penal codes (Abreu 1986, 1988) permit an elegant characterization of the set of subgame-perfect outcomes. We show that the logic of simple penal codes fails in repeated extensive-form games. We provide two examples illustrating that a subgame-perfect outcome...

Persistent link: https://www.econbiz.de/10012737863

Private Strategies in Finitely Repeated Games with Imperfect Public Monitoring

Mailath, George J. - 2001

We present three examples of finitely repeated games with public monitoring that have sequential equilibria in private strategies, i.e., strategies that depend on own past actions as well as public signals. Such private sequential equilibria can have features quite unlike those of the more...

Persistent link: https://www.econbiz.de/10012742460

The Maximum Efficient Equilibrium Payoff in the Repeated Prisoners' Dilemma

Mailath, George J. - 2001

We describe the maximum efficient subgame perfect equiligrium payoff for a player in the repeated Prisoners' Dilemma …, individually rational payoff profile can be sustained. For an open and dense subset of discount factors below the critical value …, the maximum efficient payoff is not an equilibrium payoff. When a player cannot achieve this payoff, the unique …

Persistent link: https://www.econbiz.de/10012742463

Reputation and Managerial Truth-Telling as Self-Insurance

Fisher, Adlai - 2013

We investigate truth-telling by an informed insider, or manager, who repeatedly forecasts cash flows to competitive investors in a standard message game. The insider may not trade on or sell private information, but receives wages that can depend on the current stock price or forecast accuracy....

Persistent link: https://www.econbiz.de/10012712156