Racing under uncertainty: Boundary value problem approach

Dan Cao

Journal of Economic Theory, 2014, vol. 151, issue C, 508-527

Abstract: This paper explores the continuous time and continuous space model of racing under uncertainty put forward by Budd, Harris, and Vickers [4] and allows for potentially asymmetric players. To prove the existence of Markov perfect equilibria, I use a boundary value problem formulation which is novel to the dynamic competition literature. In addition, by providing a new and intuitive definition of the pivot of an equilibrium, I show that equilibrium strategies exhibit the discouragement effect similar to that of Harris and Vickers [10] but under a more general class of the cost functions.

Keywords: Dynamic competition; Continuous time game; Discouragement effect; Boundary value problem (search for similar items in EconPapers)
JEL-codes: C62 C72 C73 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0022053113002068
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:151:y:2014:i:c:p:508-527

DOI: 10.1016/j.jet.2013.12.002

Access Statistics for this article

Journal of Economic Theory is currently edited by A. Lizzeri and K. Shell

More articles in Journal of Economic Theory from Elsevier
Bibliographic data for series maintained by Catherine Liu ().