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

Łukasz Balbus, Paweł Dziewulski, Kevin Reffett, Łukasz Woźny

Research output: Contribution to journalArticlepeer-review

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.

Original languageEnglish (US)
Pages (from-to)725-762
Number of pages38
JournalTheoretical Economics
Volume17
Issue number2
DOIs
StatePublished - May 2022
Externally publishedYes

Keywords

  • C62
  • C72
  • C73
  • comparative dynamics
  • distributional equilibria
  • Large games
  • non-aggregative games
  • social interactions
  • supermodular games

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

Fingerprint

Dive into the research topics of 'Markov distributional equilibrium dynamics in games with complementarities and no aggregate risk'. Together they form a unique fingerprint.

Cite this