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Some rationalizability results for dynamic games
Author(s) -
Akao KenIchi,
Mitra Tapan,
Sorger Gerhard
Publication year - 2012
Publication title -
international journal of economic theory
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.351
H-Index - 11
eISSN - 1742-7363
pISSN - 1742-7355
DOI - 10.1111/j.1742-7363.2012.00195.x
Subject(s) - rationalizability , mathematical economics , rationalization (economics) , preference , sequential game , economics , function (biology) , class (philosophy) , dynamic equilibrium , mathematical optimization , mathematics , computer science , game theory , nash equilibrium , microeconomics , physics , artificial intelligence , evolutionary biology , biology , thermodynamics
We study the relation between dynamical systems describing the equilibrium behavior in dynamic games and those resulting from (single‐player) dynamic optimization problems. More specifically, we derive conditions under which the dynamics generated by a model in one of these two classes can be rationalized by a model from the other class. We study this question under different assumptions about which fundamentals (e.g. technology, utility functions and time‐preference) should be preserved by the rationalization. One interesting result is that rationalizing the equilibrium dynamics of a symmetric dynamic game by a dynamic optimization problem that preserves the technology and the utility function requires a higher degree of impatience compared to that of the players in the game.