The Equilibrium Level of Rigidity in a Hierarchy
AbstractA hierarchy is considered in which those agents who perform better advance to higher levels When agents are heterogeneous and endowed with simple behavioral rules Harrington (1998a) showed that agents at high levels tend to be rigid in the sense that their behavior is unresponsive to their environment relative to agents at low levels In the current paper agents are homogeneous but sophisticated as their behavior is required to be consistent with a subgame perfect equilibrium Agents at high levels are found instead to be flexible relative to agents at low levels
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Bibliographic InfoPaper provided by The Johns Hopkins University,Department of Economics in its series Economics Working Paper Archive with number 398.
Date of creation: 1999
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