On Myopic Equilibria in Dynamic Games with Endogenous Discounting

December 1, 2006

Preview Citation

Format: Chicago

Wilko Bolt, and Alexander F. Tieman On Myopic Equilibria in Dynamic Games with Endogenous Discounting, (USA: International Monetary Fund, 2006) accessed September 18, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

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.

Subject: Asset prices, Banking, Competition, Environment

Keywords: WP

Publication Details

Pages:

16
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2006/302
Stock No:

WPIEA2006302
ISBN:

9781451865622
ISSN:

1018-5941

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