Monotonicity, Non-Participation, and Directed Search Equilibria
AbstractWe consider the canonical directed search framework in which sellers play pure strategies and assume that buyers play strategies that are monotone in prices, can remain inactive and choose to do so whenever their payoff from participating is zero regardless of what the other buyers do. We show that directed search equilibria, which have been the focus of the literature, are the only equilibria that satisfy these assumptions. Directed search equilibria are selected here not because buyers cannot coordinate – no such assumption is made – but because they fail to play strategies that require them to increase the demand for a seller’s good as this good becomes more expensive.
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Bibliographic InfoPaper provided by The University of Melbourne in its series Department of Economics - Working Papers Series with number 1147.
Length: 19 pages
Date of creation: 2012
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Directed search; monotone strategies; directed search equilibrium.;
Find related papers by JEL classification:
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-07-23 (All new papers)
- NEP-GTH-2012-07-23 (Game Theory)
- NEP-MIC-2012-07-23 (Microeconomics)
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