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A Theory of Regular Markov Perfect Equilibria in Dynamic Stochastic Games: Genericity, Stability, and Purification

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  • Doraszelski, Ulrich
  • Escobar, Juan

Abstract

This paper develops a theory of regular 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 that are all regular. These equilibria are essential and strongly stable. Moreover, they all admit purification.

Suggested Citation

  • Doraszelski, Ulrich & Escobar, Juan, 2008. "A Theory of Regular Markov Perfect Equilibria in Dynamic Stochastic Games: Genericity, Stability, and Purification," CEPR Discussion Papers 6805, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:6805
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    More about this item

    Keywords

    computation; dynamic stochastic games; essentiality; estimation; finiteness; genericity; Markov perfect equilibrium; purifiability; regularity; repeated games; strong stability;

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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