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Markov Stationary Equilibria in Stochastic Supermodular Games with Imperfect Private and Public InformationLukasz BalbusUniversity of Zielona Gora - Institute of Mathematics Kevin ReffettArizona State University - Department of Economics Lukasz Patryk WoznyWarsaw School of Economics - Department of Applied and Theoretical Economics October 03, 2012 Abstract: We study a class of discounted, infinite horizon stochastic games with public and private signals and strategic complementarities. Using monotone operators defined on the function space of values and strategies (equipped with a product order), we prove existence of a Stationary Markov Nash Equilibrium via constructive methods. In addition, we provide monotone comparative statics results for ordered perturbations of our space of stochastic games. We present examples from industrial organization literature and discuss possible extensions of our techniques for studying principal-agent models.
Number of Pages in PDF File: 19 Keywords: stochastic games, supermodular games, incomplete information, short memory (Markov) equilibria, constructive methods JEL Classification: C72 working papers seriesDate posted: March 29, 2012 ; Last revised: October 3, 2012Suggested CitationContact Information
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