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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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  1. D. B. Bernheim, 2010. "Rationalizable Strategic Behavior," Levine's Working Paper Archive 514, David K. Levine.
  2. J. Tirole & E. Maskin, 1982. "A Theory of Dynamic Oligopoly, I: Overview and Quantity Competition with Large-Fixed Costs," Working papers 320, Massachusetts Institute of Technology (MIT), Department of Economics.
  3. Roger Lagunoff & Akihiko Matsu, . ""Asynchronous Choice in Repeated Coordination Games''," CARESS Working Papres, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences 96-10, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
  4. Haller, Hans & Lagunoff, Roger, 2010. "Markov Perfect equilibria in repeated asynchronous choice games," Journal of Mathematical Economics, Elsevier, vol. 46(6), pages 1103-1114, November.
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  17. 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.
  18. Barlo, Mehmet & Carmona, Guilherme & Sabourian, Hamid, 2009. "Repeated games with one-memory," Journal of Economic Theory, Elsevier, vol. 144(1), pages 312-336, January.
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  20. De Fraja, Giovanni, 1993. "Staggered vs. synchronised wage setting in oligopoly," European Economic Review, Elsevier, vol. 37(8), pages 1507-1522, December.
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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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