Self-enforcement, heterogeneous agents, and long-run survival

Kookyoung Han

Economics Letters, 2021, vol. 204, issue C

Abstract: We consider an infinite horizon game in which players have heterogeneous beliefs about future endowments process and trade with each other. Focusing on Pareto-efficient subgame-perfect equilibria, we find that unlike dynamic general equilibrium models, every player’s consumption is bounded away from zero. That is, every player survives in a Pareto-efficient subgame-perfect equilibrium.

Keywords: Market selection; Pareto efficiency; Subgame-perfect equilibrium; Heterogeneous players (search for similar items in EconPapers)
JEL-codes: C72 C73 D81 D83 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:204:y:2021:i:c:s016517652100183x

DOI: 10.1016/j.econlet.2021.109906

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