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P-stable equilibrium : definition and some properties
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Desgranges, Gabriel and Ghosal, Sayantan (2010) P-stable equilibrium : definition and some properties. In: EPSRC Symposium Workshop on Game theory for finance, social and biological sciences (GAM), University of Warwick, Coventry, 14-17 Apr 2010 (Unpublished)
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Official URL: http://www2.warwick.ac.uk/fac/sci/maths/research/e...
Abstract
We define a continuous index of stability, p-stability, which requires equilibrium to be the unique outcome compatible with common knowledge of rationality and common knowledge of p-beliefs (beliefs that put probability at least p on the equilibrium profile). In a large class of admissible games, every equilibrium is p-stable for some p<1. In applications of the notion of p-stability we show that: (i) adding incomplete information on fundamentals could decrease the degree of strategic stability; (ii) in an exchange economies where the unique competitive equilibrium is globally unstable under tatonnement dynamics, the corresponding Nash equilibrium is p-stable for some p<1; (iii) enhanced equilibrium efficiency could decrease the degree of strategic stability in a simple trading scenario.
Item Type: | Conference Item (Paper) | ||||
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Subjects: | H Social Sciences > HB Economic Theory | ||||
Divisions: | Faculty of Social Sciences > Economics | ||||
Official Date: | 14 April 2010 | ||||
Dates: |
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Status: | Not Peer Reviewed | ||||
Publication Status: | Unpublished | ||||
Conference Paper Type: | Paper | ||||
Title of Event: | EPSRC Symposium Workshop on Game theory for finance, social and biological sciences (GAM) | ||||
Type of Event: | Workshop | ||||
Location of Event: | University of Warwick, Coventry | ||||
Date(s) of Event: | 14-17 Apr 2010 |
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