Cheating for the common good in a Macroeconomic policy game
AbstractThis paper presents a simple repeated-game model of interaction between an optimizing government and the private sector. Two polar cases are considered: (a) the private sector is represented by a single agent; and (b) there is a continuum of heterogenous atomistic private agents. In both cases, the government starts each repetition by making a non-binding announcement about its future actions. The players have complete and perfect information, with one exception: the private agents do not know whether or not the government will act as announced. Thus, each private agent ieither behaves with probability ði as if it trusted the announcement, or plays with probability 1 . ði as a Stackelberg leader. After observing the reaction of the private sector, the government
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Bibliographic InfoPaper provided by Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales in its series Documentos del Instituto Complutense de Análisis Económico with number 0104.
Length: 43 page
Date of creation: 2001
Date of revision:
Macroeconomic policy-making; Kydland-Prescott model; time inconsistency; reinforcement learning; reversed Stackelberg games; optimal cheating strategies; reputation; credibility.;
Other versions of this item:
- Deissenberg, Christophe & Gonzalez, Francisco Alvarez, 2002. "Cheating for the common good in a macroeconomic policy game," Journal of Economic Dynamics and Control, Elsevier, vol. 26(9-10), pages 1457-1479, August.
- C69 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Other
- C79 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Other
- E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
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