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An optimistic search equilibrium

Author

Listed:
  • Dipjyoti Majumdar

    (Concordia University
    CIREQ)

  • Artyom Shneyerov

    (Concordia University
    CIREQ
    CIRANO)

  • Huan Xie

    (Concordia University
    CIREQ
    CIRANO)

Abstract

We study a market search equilibrium with aggregate uncertainty, private information and heterogeneous beliefs that are initially optimistic. Despite these biased beliefs, it is shown that all optimistic equilibria converge to perfect competition in the limit as the time between matches tends to 0.

Suggested Citation

  • Dipjyoti Majumdar & Artyom Shneyerov & Huan Xie, 2016. "An optimistic search equilibrium," Review of Economic Design, Springer;Society for Economic Design, vol. 20(2), pages 89-114, June.
  • Handle: RePEc:spr:reecde:v:20:y:2016:i:2:d:10.1007_s10058-015-0182-9
    DOI: 10.1007/s10058-015-0182-9
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    References listed on IDEAS

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    Cited by:

    1. Shneyerov, Artyom & Wong, Adam C.L., 2020. "Price discovery in a matching and bargaining market with aggregate uncertainty," Games and Economic Behavior, Elsevier, vol. 124(C), pages 183-206.

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    More about this item

    Keywords

    Markets with search frictions; Heterogeneous beliefs; Optimism; Bargaining; Aggregate uncertainty;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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