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Asynchronous Choice and Markov Equilibria:Theoretical Foundations and Applications

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Author Info

  • V. Bhaskar

    (University of Essex)

  • Fernando Vega-Redondo

    (University of Alicante)

Abstract

This paper provides a theoretical foundation for Markov (perfect) equilibria in repeated games with asynchronous moves that is based on memory costs. We show that if players incur a ``complexity cost'' which depends on the memory length required by their strategies, then any rationalizable strategy is Markovian. Thus, every Nash or perfect equilibrium is Markovian as well. We also provide a dynamic learning rationale for this conclusion. Our result has interesting implications for repeated asynchronous choice games where the stage game is of common interest. If players are sufficiently patient, rationalizability ensures repeated play of the efficient stage-game equilibrium if this equilibrium satisfies a risk-related condition --- in 2x2 games risk- dominance is a sufficient condition.

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Bibliographic Info

Paper provided by EconWPA in its series Game Theory and Information with number 9809003.

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Date of creation: 15 Sep 1998
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Handle: RePEc:wpa:wuwpga:9809003

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Web page: http://128.118.178.162

Related research

Keywords: Markov Equilibrium; Bouded Memory;

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References

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  1. Jeheil Phillippe, 1995. "Limited Horizon Forecast in Repeated Alternate Games," Journal of Economic Theory, Elsevier, vol. 67(2), pages 497-519, December.
  2. Sabourian, Hamid, 1998. "Repeated games with M-period bounded memory (pure strategies)," Journal of Mathematical Economics, Elsevier, vol. 30(1), pages 1-35, August.
  3. Hans Haller & Roger Lagunoff, 2006. "Markov Perfect Equilibria in Repeated Asynchronous Choice Games," Levine's Bibliography 321307000000000560, UCLA Department of Economics.
  4. Eric Maskin & Jean Tirole, 2010. "A Theory of Dynamic Oligopoly, 1: Overview and Quantity Competition with Large Fixed Costs," Levine's Working Paper Archive 397, David K. Levine.
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  8. Roger Lagunoff & Akihiko Matsu, . ""Asynchronous Choice in Repeated Coordination Games''," CARESS Working Papres 96-10, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
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  13. Ehud Kalai & William Stanford, 1986. "Finite Rationality and Interpersonal Complexity in Repeated Games," Discussion Papers 679, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  14. Dutta Prajit K., 1995. "A Folk Theorem for Stochastic Games," Journal of Economic Theory, Elsevier, vol. 66(1), pages 1-32, June.
  15. Maskin, Eric & Tirole, Jean, 1988. "A Theory of Dynamic Oligopoly, II: Price Competition, Kinked Demand Curves, and Edgeworth Cycles," Econometrica, Econometric Society, vol. 56(3), pages 571-99, May.
  16. Jorgen W. Weibull, 1997. "Evolutionary Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262731215, December.
  17. Dow, James, 1991. "Search Decisions with Limited Memory," Review of Economic Studies, Wiley Blackwell, vol. 58(1), pages 1-14, January.
  18. Pearce, David G, 1984. "Rationalizable Strategic Behavior and the Problem of Perfection," Econometrica, Econometric Society, vol. 52(4), pages 1029-50, July.
  19. Barlo, Mehmet & Carmona, Guilherme & Sabourian, Hamid, 2009. "Repeated games with one-memory," Journal of Economic Theory, Elsevier, vol. 144(1), pages 312-336, January.
  20. Kaniovski Yuri M. & Young H. Peyton, 1995. "Learning Dynamics in Games with Stochastic Perturbations," Games and Economic Behavior, Elsevier, vol. 11(2), pages 330-363, November.
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Cited by:
  1. Dutta, Prajit K., 2012. "Coordination need not be a problem," Games and Economic Behavior, Elsevier, vol. 76(2), pages 519-534.

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