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On identifying subgame-perfect equilibrium outcomes for timing games

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  • Steg, Jan-Henrik

Abstract

In Smirnov and Wait (2021), an iterative method is devised to identify subgame-perfect equilibrium outcomes of timing games. This note shows by simple examples that the identification is in fact neither necessary nor sufficient. The main issue is that the method does not fully reflect the requirements of subgame perfection, so there is a conceptual and not just a technical problem.

Suggested Citation

  • Steg, Jan-Henrik, 2022. "On identifying subgame-perfect equilibrium outcomes for timing games," Games and Economic Behavior, Elsevier, vol. 135(C), pages 74-78.
    • Handle: RePEc:eee:gamebe:v:135:y:2022:i:c:p:74-78
    DOI: 10.1016/j.geb.2022.05.012
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    References listed on IDEAS

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    1. Steg, Jan-Henrik, 2018. "Preemptive investment under uncertainty," Games and Economic Behavior, Elsevier, vol. 110(C), pages 90-119.
    2. Laraki, Rida & Solan, Eilon & Vieille, Nicolas, 2005. "Continuous-time games of timing," Journal of Economic Theory, Elsevier, vol. 120(2), pages 206-238, February.
    3. Simon, Leo K & Stinchcombe, Maxwell B, 1989. "Extensive Form Games in Continuous Time: Pure Strategies," Econometrica, Econometric Society, vol. 57(5), pages 1171-1214, September.
    4. Smirnov, Vladimir & Wait, Andrew, 2021. "Preemption with a second-mover advantage," Games and Economic Behavior, Elsevier, vol. 129(C), pages 294-309.
    5. Smirnov, Vladimir & Wait, Andrew, 2015. "Innovation in a generalized timing game," International Journal of Industrial Organization, Elsevier, vol. 42(C), pages 23-33.
    6. Hendricks, Ken & Weiss, Andrew & Wilson, Charles A, 1988. "The War of Attrition in Continuous Time with Complete Information," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 29(4), pages 663-680, November.
    7. Drew Fudenberg & Jean Tirole, 1985. "Preemption and Rent Equalization in the Adoption of New Technology," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 52(3), pages 383-401.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Timing games; Subgame-perfect equilibrium; Second-mover advantage;
    All these keywords.

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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