On Myopic Equilibria in Dynamic Games with Endogenous Discounting
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Summary:
This paper derives an equilibrium for a competitive multi-stage game in which an agents' current action influences his probability of survival into the next round of play. This is directly relevant in banking, where a banks' current lending and pricing decisions determines its future probability of default. In technical terms, our innovation is to consider a multi-stage game with endogenous discounting. An equilibrium for such a multi-stage game with endogenous discounting has not been derived before in the literature.
Series:
Working Paper No. 2006/302
Subject:
English
Publication Date:
December 1, 2006
ISBN/ISSN:
9781451865622/1018-5941
Stock No:
WPIEA2006302
Pages:
16
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