Rungcharoenkitkul, Phurichai (2006): Learning and Hysteresis in a Dynamic Coordination Game.
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This paper introduces a dynamic coordination game with incomplete information defined by a state variable that evolves stochastically. Incomplete information enables us to use iterated dominance argument in order to resolve the indeterminacy issues. The key endogenous variable is the belief that each agent holds about the state of the world. We show that as agents update their heterogeneous beliefs through learning sequentially, they adjust their beliefs to justify the status quo. This effect induces equilibrium actions that support the status quo, a property we call hysteresis.
|Item Type:||MPRA Paper|
|Original Title:||Learning and Hysteresis in a Dynamic Coordination Game|
|Keywords:||dynamic coordination game, hysteresis, global games|
|Subjects:||D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D83 - Search ; Learning ; Information and Knowledge ; Communication ; Belief ; Unawareness
C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C73 - Stochastic and Dynamic Games ; Evolutionary Games ; Repeated Games
|Depositing User:||Phurichai Rungcharoenkitkul|
|Date Deposited:||26. Aug 2011 07:18|
|Last Modified:||23. Sep 2015 12:21|
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