On Myopic Equilibria in Dynamic Games with Endogenous Discounting
December 1, 2006
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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.
Subject: Asset prices, Banking, Competition, Environment
Keywords: WP
Pages:
16
Volume:
2006
DOI:
Issue:
302
Series:
Working Paper No. 2006/302
Stock No:
WPIEA2006302
ISBN:
9781451865622
ISSN:
1018-5941
