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Playing Multiple Complementarity Games Simultaneously

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  • Kiminori Matsuyama

Abstract

This paper analyzes the situation, in which a continuum of identical players is engaged in more than one activity and each activity is characterized by a complementarity game. The player's intensity levels across different activities are linked in such a way that the marginal cost of increasing her intensity in one activity increases with her own intensity levels in other activities. Compared to the case where these games are played independently, a smaller degree of complementarity in each game is required to generate multiple stable Nash equilibria, which are all asymmetric in that the players operate at different levels in different activities. The implications of these and other results, which have a close connection with the Frobenius theory of positive matrices, are discussed in the context of two macroeconomic applications: endogenous inequality of nations and endogenous business cycles.

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Bibliographic Info

Paper provided by Northwestern University, Center for Mathematical Studies in Economics and Management Science in its series Discussion Papers with number 1240.

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Date of creation: Jan 1999
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Handle: RePEc:nwu:cmsems:1240

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Postal: Center for Mathematical Studies in Economics and Management Science, Northwestern University, 580 Jacobs Center, 2001 Sheridan Road, Evanston, IL 60208-2014
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Web page: http://www.kellogg.northwestern.edu/research/math/
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Related research

Keywords: Strategic Complementarities; Multiple Activities; Bifurcation Analysis; The Structure of the Equilibrium Set; Globalization and Inequality of Nations; Intertemporal Substitution and Business Cycles;

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References

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  1. Holmstrom, Bengt & Milgrom, Paul, 1991. "Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design," Journal of Law, Economics and Organization, Oxford University Press, vol. 7(0), pages 24-52, Special I.
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  3. Kiminori Matsuyama, 1999. "Growing Through Cycles," Econometrica, Econometric Society, vol. 67(2), pages 335-348, March.
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  16. Matsui Akihiko & Matsuyama Kiminori, 1995. "An Approach to Equilibrium Selection," Journal of Economic Theory, Elsevier, vol. 65(2), pages 415-434, April.
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Cited by:
  1. Kiminori Matsuyama, 2002. "Explaining Diversity: Symmetry-Breaking in Complementarity Games," Discussion Papers 1336, Northwestern University, Center for Mathematical Studies in Economics and Management Science.

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