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Heterogeneity in a Class of Two-Player Games


  • Charles Figuières

    () (INRA - LAMETA)

  • Frédéric Rychen

    () (GREQAM - IDEP, University of the Mediterranean)


In two-player games with negative (positive) spillovers it is well-known that symmetric agents both overact (underact) at the Nash equilibria. We show that for heterogeneous agents this rule of thumb has to be amended if the game features strategic substitutability.

Suggested Citation

  • Charles Figuières & Frédéric Rychen, 2011. "Heterogeneity in a Class of Two-Player Games," Economics Bulletin, AccessEcon, vol. 31(1), pages 426-435.
  • Handle: RePEc:ebl:ecbull:eb-10-00309

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    References listed on IDEAS

    1. Alberto Alesina & Robert J. Barro, 2002. "Currency Unions," The Quarterly Journal of Economics, Oxford University Press, vol. 117(2), pages 409-436.
    2. Krugman, Paul, 1980. "Scale Economies, Product Differentiation, and the Pattern of Trade," American Economic Review, American Economic Association, vol. 70(5), pages 950-959, December.
    3. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    4. J. Peter Neary, 2009. "Putting the "New" into New Trade Theory: Paul Krugman's Nobel Memorial Prize in Economics," Scandinavian Journal of Economics, Wiley Blackwell, vol. 111(2), pages 217-250, June.
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    More about this item


    heterogeneity; over(under)-investment; strategic complementarity; strategic substitutability; two-player games;

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D6 - Microeconomics - - Welfare Economics


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