Finite State Dynamic Games with Asymmetric Information: A Framework for Applied Work

Chaim Fershtman () and Ariel Pakes

No 7323, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: With applied work in mind, we define an equilibrium notion for dynamic games with asymmetric information which does not require a specification for players' beliefs about their opponent types. This enables us to define equilibrium conditions which, at least in principal, are testable and can be computed using a simple reinforcement learning algorithm. We conclude with an example that endogenizes the maintenance decisions for electricity generators in a dynamic game among electric utilities in which the costs states of the generators are private information.

Keywords: Applied Markov Equilibrium; Dynamic Games; Dynamic Oligopoly (search for similar items in EconPapers)
JEL-codes: C63 C73 L13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cta and nep-gth
Date: 2009-06

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Working Paper: Finite State Dynamic Games with Asymmetric Information: A Framework for Applied Work (2005)
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