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Markov distributional equilibrium dynamics in games with complementarities and no aggregate risk

Author

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  • Balbus, Lukasz

    (Faculty of Mathematics, Computer Science and Econometrics, University of Zielona Gora)

  • Dziewulski, Pawel

    (Department of Economics, University of Sussex)

  • Reffett, Kevin

    (Department of Economics, Arizona State University)

  • Wozny, Lukasz

    (Department of Quantitative Economics, Warsaw School of Economics)

Abstract

We present a new approach to studying equilibrium dynamics in a class of stochastic games with a continuum of players with private types and strategic complementarities. We introduce a suitable equilibrium concept, called Markov Stationary Nash Distributional Equilibrium (MSNDE), prove its existence, and determine comparative statics of equilibrium paths and the steady state invariant distributions to which they converge. Finally, we provide numerous applications of our results including: dynamic models of growth with status concerns, social distance, and paternalistic bequests with endogenous preferences for consumption.

Suggested Citation

  • Balbus, Lukasz & Dziewulski, Pawel & Reffett, Kevin & Wozny, Lukasz, 2022. "Markov distributional equilibrium dynamics in games with complementarities and no aggregate risk," Theoretical Economics, Econometric Society, vol. 17(2), May.
    • Handle: RePEc:the:publsh:4624
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    Cited by:

    1. Uttiya Paul & Tarun Sabarwal, 2023. "Directional monotone comparative statics in function spaces," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 11(1), pages 153-169, April.
    2. Aniruddha Ghosh, 2024. "Robust Comparative Statics with Misspecified Bayesian Learning," Papers 2407.17037, arXiv.org.
    3. Tarun Sabarwal, 2023. "Universal Theory of Equilibrium in Models with Complementarities," WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS 202312, University of Kansas, Department of Economics, revised Nov 2023.
    4. Tarun Sabarwal, 2023. "General theory of equilibrium in models with complementarities," WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS 202307, University of Kansas, Department of Economics, revised Sep 2023.

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    More about this item

    Keywords

    Large games; distributional equilibria; supermodular games; comparative dynamics; non-aggregative games; social interactions;
    All these keywords.

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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