On Myopic Equilibria in Dynamic Games with Endogenous Discounting

Author/Editor:

Wilko Bolt ; Alexander F. Tieman

Publication Date:

December 1, 2006

Electronic Access:

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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. 06/302

Subject:

English

Publication Date:

December 1, 2006

ISBN/ISSN:

9781451865622/1018-5941

Stock No:

WPIEA2006302

Format:

Paper

Pages:

16

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