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A theory of regular Markov perfect equilibria in dynamic stochastic games: genericity, stability, and purification

  • Doraszelski, Ulrich

    ()

    (Department of Economics, Harvard University)

  • Escobar, Juan

    ()

    (Department of Industrial Engineering, University of Chile)

This paper studies generic properties of Markov perfect equilibria in dynamic stochastic games. We show that almost all dynamic stochastic games have a finite number of locally isolated Markov perfect equilibria. These equilibria are essential and strongly stable. Moreover, they all admit purification. To establish these results, we introduce a notion of regularity for dynamic stochastic games and exploit a simple connection between normal form and dynamic stochastic games.

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File URL: http://econtheory.org/ojs/index.php/te/article/viewFile/20100369/4290/157
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Article provided by Econometric Society in its journal Theoretical Economics.

Volume (Year): 5 (2010)
Issue (Month): 3 (September)
Pages:

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Handle: RePEc:the:publsh:632
Contact details of provider: Web page: http://econtheory.org

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