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Strategic Growth with Recursive Preferences: Decreasing Marginal Impatience

Author

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  • Luis Alcalá

    (Universidad Nacional de San Luis-CONICET)

  • Fernando Tohmé

    (Universidad Nacional del Sur-CONICET)

  • Carlos Dabús

    (Universidad Nacional del Sur-CONICET)

Abstract

This paper studies a two-agent strategic model of capital accumulation with heterogeneity in preferences and income shares. Preferences are represented by recursive utility functions that satisfy decreasing marginal impatience. The stationary equilibria of this dynamic game are analyzed under two alternative information structures: one in which agents precommit to future actions, and another one where they use Markovian strategies. In both cases, we develop sufficient conditions to show the existence of these equilibria and characterize their stability properties. Under certain regularity conditions, a precommitment equilibrium shows monotone convergence of aggregate variables, but Markovian equilibria may exhibit nonmonotonic paths, even in the long-run.

Suggested Citation

  • Luis Alcalá & Fernando Tohmé & Carlos Dabús, 2019. "Strategic Growth with Recursive Preferences: Decreasing Marginal Impatience," Dynamic Games and Applications, Springer, vol. 9(2), pages 314-365, June.
    • Handle: RePEc:spr:dyngam:v:9:y:2019:i:2:d:10.1007_s13235-018-0269-3
    DOI: 10.1007/s13235-018-0269-3
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    Cited by:

    1. Fernando Delbianco & Andrés Fioriti & Fernando Tohmé, 2023. "Markov chains, eigenvalues and the stability of economic growth processes," Empirical Economics, Springer, vol. 64(3), pages 1347-1373, March.

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