Symmetric vs Asymmetric Equilibria and Stochastic Stability in a Dynamic Game of Legislative Lobbying
Raouf Boucekkine (),
Fabien Prieur () and
Benteng Zou ()
Working Papers from HAL
We study a 2-players stochastic dynamic symmetric lobbying differential game. Players have opposite interests; at any date, each player invests in lobbying activities to alter the legislation in her own benefit. The payoffs are quadratic and uncertainty is driven by a Wiener process. We prove that while a symmetric Markov Perfect Equilibrium (MPE) always exists, an asymmetric MPE only emerges when uncertainty is large enough. In the latter case, the legislative state converges to a stationary invariant distribution. Interestingly enough, the implications for the rent dissipation problem are much more involved than in the deterministic counterpart: the symmetric MPE still yields a limited social cost while the asymmetric may yield significant losses. We also characterize the most likely asymptotic state, in particular regarding the level of uncertainty.
Keywords: stochastic differential games; symmetric versus asymmetric equilibrium; political lobbying; stochastic stability; social cost of lobbying (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm, nep-ger, nep-hpe and nep-ore
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Working Paper: Symmetric vs Asymmetric Equilibria and Stochastic Stability in a Dynamic Game of Legislative Lobbying (2018)
Working Paper: Symmetric vs asymmetric equilibria and stochastic stability in a dynamic game of legislative lobbying (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:halshs-01181214
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