Noisy Stochastic Games
This paper establishes existence of a stationary Markov perfect equilibrium in general stochastic games with noiseâ€”a component of the state that is nonatomically distributed and not directly affected by the previous periodâ€™s state and actions. Noise may be simply a payoff-irrelevant public randomization device, delivering known results on existence of correlated equilibrium as a special case. More generally, noise can take the form of shocks that enter into playersâ€™ stage payoffs and the transition probability on states. The existence result is applied to a model of industry dynamics and to a model of dynamic electoral competition.
|Date of creation:||Feb 2012|
|Date of revision:|
|Contact details of provider:|| Postal: University of Rochester, Center for Economic Research, Department of Economics, Harkness 231 Rochester, New York 14627 U.S.A.|
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