Lockwood, Ben (1986) Dynamic equilibrium : game theory, contracts, and search. PhD thesis, University of Warwick.

Preview

Text WRAP_thesis_Lockwood_1986.pdf - Submitted Version Download (6Mb) | Preview

Request Changes to record.

Abstract

This thesis comprises three chapters centered on two common themes.
The first theme is the application of non-cooperative game theory
to economic questions; the second is the study of the kind of
arrangements that can arise in the labour market as a response to
asymmetric information.

The first chapter surveys recent developments in non-cooperative game
theory, and then attempts an extension of the recent results
characterising perfect equilibrium payoffs in repeated games without
discounting to more general games. We choose the dynamic game framework
for the generalisation, and shows that there are two jointly, but not
indi vidually sufficient condi tions for the generalisation to
go through.

We then turn to an application of these ideas to the theory of longterm
contracts. The main motivation for this is that the view that
wages and employment are determined by risk-sharing implicit contracts
is now a well established alternative to fixed-price and marketclearing
theories. In general, long-term arrangements may mitigate
inefficiencies in the short-term contract that arise from various
sorts of asymmetric information which are likely to be prevalent in
worker-firm relationships. In this chapter two things are attempted;
first, we try to integrate the game-theoretic approach to contractinq
of Radner with the work of Townshend, Rogerson, Roberts and Manning
among others, and second, we characterise the optimal contract, and
obtain some new results.

The labour market is also the topic of the third chapter. Here, we
attempt to extend a well-known model of "frictional" labour market
equilibrium to the case where onr or both sides of the market
differ in inherent characteristics (e.g. skills) which may be
observable or unobservable. We show first that the equilibrium
may be inefficient even in the absence of externalities which work
through the matching technology. Also, the model with unobservable
characteristics provides a framework for a theoretical anal;Tsis of
the practice of firms of screening workers by unemployment duration.
We show that in our model, there are screening equilibria, and also
investigate in some detail the impact of exogenous variables on the
equilibrium.

Item Type:	Thesis (PhD)
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences > HG Finance
Library of Congress Subject Headings (LCSH):	Game theory , Employment (Economic theory), Mathematical models, Econometric models
Official Date:	January 1986
Dates:	Date Event January 1986 Submitted
Institution:	University of Warwick
Theses Department:	Department of Economics
Thesis Type:	PhD
Publication Status:	Unpublished
Supervisor(s)/Advisor:	Stern, Nick
Sponsors:	Economic and Social Research Council (Great Britain) (ESRC)
Extent:	201 leaves
Language:	eng

Request changes or add full text files to a record

Repository staff actions (login required)

View Item

Downloads