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An Evolutionary Model Of Debt


  • Kislaya Prasad

    (Florida State University)

  • Mary Burke

    (Florida State University)


A reputational model of debt is examined from an evolutionary game perspective. The game is played between randomly matched opponents and we ask whether debt can be supported in the long run steady state when lenders are given the option of joining an information sharing coalition. The players are forward-looking, but otherwise not very sophisticated. The paper uses a mix of analytical and computational methods and we actually simulate such an economy and examine long run steady states. Conclusions are drawn about the nature of institutions that support debt.

Suggested Citation

  • Kislaya Prasad & Mary Burke, 2000. "An Evolutionary Model Of Debt," Computing in Economics and Finance 2000 82, Society for Computational Economics.
  • Handle: RePEc:sce:scecf0:82

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    References listed on IDEAS

    1. Bulow, Jeremy & Rogoff, Kenneth, 1989. "Sovereign Debt: Is to Forgive to Forget?," American Economic Review, American Economic Association, vol. 79(1), pages 43-50, March.
    2. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
    3. Kandori, Michihiro & Mailath, George J & Rob, Rafael, 1993. "Learning, Mutation, and Long Run Equilibria in Games," Econometrica, Econometric Society, vol. 61(1), pages 29-56, January.
    4. Cole, Harold L. & Kehoe, Patrick J., 1995. "The role of institutions in reputation models of sovereign debt," Journal of Monetary Economics, Elsevier, vol. 35(1), pages 45-64, February.
    5. P. Young, 1999. "The Evolution of Conventions," Levine's Working Paper Archive 485, David K. Levine.
    6. Greif, Avner, 1993. "Contract Enforceability and Economic Institutions in Early Trade: the Maghribi Traders' Coalition," American Economic Review, American Economic Association, vol. 83(3), pages 525-548, June.
    7. Michihiro Kandori, 1992. "Social Norms and Community Enforcement," Review of Economic Studies, Oxford University Press, vol. 59(1), pages 63-80.
    8. DANIEL B. KLElN, 1992. "Promise Keeping In The Great Society: A Model Of Credit Information Sharing," Economics and Politics, Wiley Blackwell, vol. 4(2), pages 117-136, July.
    9. Michi Kandori, 2010. "Social Norms and Community Enforcement," Levine's Working Paper Archive 630, David K. Levine.
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    Cited by:

    1. Thierry Vignolo, 2010. "Imitation and selective matching in reputational games," Journal of Evolutionary Economics, Springer, vol. 20(3), pages 395-412, June.

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