One Smart Agent

58 Pages Posted: 11 Jul 2008

See all articles by John Sutton

John Sutton

London School of Economics & Political Science (LSE) - Department of Economics

Date Written: December 1995

Abstract

This paper proposes an equilibrium concept for a class of games in which players make irreversible costly decisions; these games have been widely used in the recent I.O. literature. The equilibrium concept is defined, not in the space of strategies, but in the space of (observable outcomes). It is weaker than perfect Nash equilibrium, and involves combining a form of ?survivor principle? with an assumption regarding entry. This assumption involves only a very weak rationality requirement: if a profitable opportunity exists in the market, there is ?One smart agent ? who will find it. This weak equilibrium concept is sufficient to imply some empirically interesting regularities in the area of market structure.

Suggested Citation

Sutton, John, One Smart Agent (December 1995). LSE STICERD Research Paper No. EI08. Available at SSRN: https://ssrn.com/abstract=1158288

John Sutton (Contact Author)

London School of Economics & Political Science (LSE) - Department of Economics ( email )

Houghton Street
London WC2A 2AE
United Kingdom

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