Open AccessProtocol invariance and the timing of decisions in dynamic games
Author(s) -
Doraszelski Ulrich,
Escobar Juan F.
Publication year - 2019
Publication title -
theoretical economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 4.404
H-Index - 32
eISSN - 1555-7561
pISSN - 1933-6837
DOI - 10.3982/te3230
Subject(s) - extant taxon , computer science , mathematical economics , protocol (science) , markov chain , invariant (physics) , markov perfect equilibrium , sequential game , set (abstract data type) , repeated game , markov process , class (philosophy) , theoretical computer science , mathematics , game theory , nash equilibrium , artificial intelligence , medicine , statistics , alternative medicine , pathology , evolutionary biology , machine learning , programming language , mathematical physics , biology
We characterize a class of dynamic stochastic games that we call separable dynamic games with noisy transitions and establish that these widely used models are protocol invariant provided that periods are sufficiently short. Protocol invariance means that the set of Markov perfect equilibria is nearly the same irrespective of the order in which players are assumed to move within a period. Protocol invariance can facilitate applied work, and renders the implications and predictions of a model more robust. Our class of dynamic stochastic games includes investment games, research and development races, models of industry dynamics, dynamic public contribution games, asynchronously repeated games, and many other models from the extant literature.