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The Castle on the Hill

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  • David Levine

    (UCLA)

Abstract

A simple example of a stochastic games with irreversibility is studied and it is shown that the folk theorem fails in a robust way. In this game of Castle on the Hill, for a broad range of discount factors, including those close to me, equilibrium is unique. Moreover, the equilibrium for large discount factors is Pareto dominated by the equilibrium for low discount factors. A unique cyclic equilibrium is also possible for intermediate ranges of discount factors. (Copyright: Elsevier)

Suggested Citation

  • David Levine, 2000. "The Castle on the Hill," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 3(2), pages 330-337, April.
    • Handle: RePEc:red:issued:v:3:y:2000:i:2:p:330-337
    DOI: 10.1006/redy.2000.0094
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    References listed on IDEAS

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    1. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January.
    2. Binmore, K & Shaked, A & Sutton, J, 1985. "Testing Noncooperative Bargaining Theory: A Preliminary Study," American Economic Review, American Economic Association, vol. 75(5), pages 1178-1180, December.
    3. Dutta, P.K., 1991. "A Folk Theorem for Stochastic Games," RCER Working Papers 293, University of Rochester - Center for Economic Research (RCER).
    4. Drew Fudenberg & David Levine & Eric Maskin, 2008. "The Folk Theorem With Imperfect Public Information," World Scientific Book Chapters, in: Drew Fudenberg & David K Levine (ed.), A Long-Run Collaboration On Long-Run Games, chapter 12, pages 231-273, World Scientific Publishing Co. Pte. Ltd..
    5. Drew Fudenberg & Eric Maskin, 2008. "The Folk Theorem In Repeated Games With Discounting Or With Incomplete Information," World Scientific Book Chapters, in: Drew Fudenberg & David K Levine (ed.), A Long-Run Collaboration On Long-Run Games, chapter 11, pages 209-230, World Scientific Publishing Co. Pte. Ltd..
    6. Abreu, Dilip & Dutta, Prajit K & Smith, Lones, 1994. "The Folk Theorem for Repeated Games: A NEU Condition," Econometrica, Econometric Society, vol. 62(4), pages 939-948, July.
    7. Dutta Prajit K., 1995. "A Folk Theorem for Stochastic Games," Journal of Economic Theory, Elsevier, vol. 66(1), pages 1-32, June.
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    Cited by:

    1. David K. Levine & Aldo Rustichini, 2000. "Introduction," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 3(2), pages 213-215, April.
    2. David K Levine & Aldo Rustichini, 2000. "Introduction: The Dynamic Games Special Issue," Levine's Working Paper Archive 2127, David K. Levine.
    3. Pim Heijnen & Lammertjan Dam, 2019. "Catastrophe and Cooperation," Dynamic Games and Applications, Springer, vol. 9(1), pages 122-141, March.

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