A Theory of stopping Time Games with Applications to Product Innovations and Asset Sales
AbstractIn this paper, the pure strategy sub game perfect equilibria of a general class of stopping time games are studied. It is shown that there always exists a natural class of Markov Perfect Equilibria, called stopping equilibria. Such equilibria can be computed as a solution of a single agent stopping time problem, rather than of a fixed point problem. A complete characterization of stopping equilibria is presented. Conditions are given under which the outcomes of such equilibria span the set of all possible outcomes from perfect equilibria. Two economic applications of the theory, product innovations and the timing of asset sales, are discussed.
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Bibliographic InfoPaper provided by University of Rochester - Center for Economic Research (RCER) in its series RCER Working Papers with number 263.
Length: 22 pages
Date of creation: 1991
Date of revision:
Contact details of provider:
Postal: University of Rochester, Center for Economic Research, Department of Economics, Harkness 231 Rochester, New York 14627 U.S.A.
game theory ; economic equilibrium ; economic models;
Other versions of this item:
- Dutta, Prajit K & Rustichini, Aldo, 1993. "A Theory of Stopping Time Games with Applications to Product Innovations and Asset Sales," Economic Theory, Springer, vol. 3(4), pages 743-63, October.
- Dutta, P.K. & Rustichini, A., 1991. "A Theory of Stopping Time Games with Applications to Product Innovations and Asset Sales," Discussion Papers 1991_35, Columbia University, Department of Economics.
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