Markov Equilibria in Dynamic Matching and Bargaining Games

Douglas Gale (douglas.gale@nyu.edu) and Hamid Sabourian

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: Rubinstein and Wolinsky (1990) show that a simple homogeneous market with exogenous matching has continuum of (non-competitive) perfect equilibria, but the unique Markov perfect equilibrium is competitive. By contrast, in the more general case of heterogeneous markets, we show there exists a continuum of (non-competitive) Markov perfect equilibria. However, a refinement of the Markov property, which we call monotonicity, does suffice to guarantee perfectly competitive equilibria, if, and only if, it is monotonic. The monotonicity property is closely related to the concept of Nash equilibrium with complexity costs.

Keywords: bargaining; bounded rationality; competitive equilibrium (search for similar items in EconPapers)
Pages: 41
Date: 2003-04
Note: ET
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Markov equilibria in dynamic matching and bargaining games (2006)
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