EXPECTATIONAL STABILITY IN AGGREGATIVE GAMES

Richard Cornes, Luciana C. Fiorini and Wilfredo Maldonado ()
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Luciana C. Fiorini: Business School, The University of Western Australia, https://www.web.uwa.edu.au/person/lucianac..fiorini

No 17-06, Economics Discussion / Working Papers from The University of Western Australia, Department of Economics

Abstract: Using the replacement function associated with aggregative games, we analyze the expectational dynamics of the aggregate strategy of the game. We can interpret the Nash equilibrium of the game as the rational expectations equilibrium (REE) of the system, and we examine the expectational stability of the REE. We characterize local stability in terms of fundamentals and the REE itself. We illustrate the results through well-known aggregative games (Cournot games, Bertrand competition with differentiated goods, rent seeking games, and the public goods provision game) and analyze their global expectational dynamics.

Pages: 32
Date: 2017
New Economics Papers: this item is included in nep-gth
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Journal Article: Expectational stability in aggregative games (2021)
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