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Creator: Allen, Beth, Deneckere, Raymond, Faith, Tom, and Kovenock, Daniel J. Series: Staff report (Federal Reserve Bank of Minneapolis. Research Department) Number: 187 Abstract:
This paper considers the role of capacity as a strategic entry deterrent for a game in which the incumbent and entrant sequentially precommit to capacity levels before competing in price, possibly using mixed strategies. Depending on the magnitudes of the fixed set-up cost, the cost of capacity, and the relative costs of production, the model produces a wide spectrum of equilibrium behaviors, including some not previously suggested in the literature. Interesting deterrence effects occur because firms need time to build. In contrast to much previous work, the incumbent may hold idle capacity when entry is deterred.
Creator: Allen, Beth Series: Staff report (Federal Reserve Bank of Minneapolis. Research Department) Number: 225 Abstract:
This paper surveys cooperative game theory when players have incomplete or asymmetric information, especially when the TU and NTU games are derived from economic models. First some results relating balanced games and markets are summarized, including theorems guaranteeing that the core is nonempty. Then the basic pure exchange economy is extended to include asymmetric information. The possibilities for such models to generate cooperative games are examined. Here the core is emphasized as a solution, and criteria are given for its nonemptiness. Finally, an alternative approach is explored based on Harsanyi’s formulation of games with incomplete information.
Palabra clave: Market Games, Asymmetric Information, Incomplete Information, Core, TU Games, and NT Games Tema: D82 - Asymmetric and Private Information; Mechanism Design, C71 - Cooperative Games, and D51 - Exchange and Production Economies
Creator: Allen, Beth Series: Staff report (Federal Reserve Bank of Minneapolis. Research Department) Number: 226 Abstract:
This paper surveys implementation theory when players have incomplete or asymmetric information, especially in economic environments. After the basic problem is introduced, the theory of implementation is summarized. Some coalitional considerations for implementation problems are discussed. For economies with asymmetric information, cooperative games based on incentive compatibility constraints or Bayesian incentive compatible mechanisms are derived and examined.
Palabra clave: Incentive Compatibility, Asymmetric Information, Nontransferable Utility, Incomplete Information, Cooperative Games, Mechanisms, Core, Implementation, and Bayesian-Nash Revelation Principle Tema: D82 - Asymmetric and Private Information; Mechanism Design, C72 - Noncooperative Games, C71 - Cooperative Games, D71 - Social Choice; Clubs; Committees; Associations, and D51 - Exchange and Production Economies
Creator: Allen, Beth and Jordan, James S. Series: Staff report (Federal Reserve Bank of Minneapolis. Research Department) Number: 252 Abstract:
This paper provides a selective review of theoretical research on the consistency of rational expectations equilibrium and its properties in microeconomic models. The general equilibrium framework is emphasized throughout the paper. After defining rational expectations equilibrium for a pure exchange economy, the paper presents a simple counterexample to illustrate that rational expectations equilibria need not exist. Results are summarized for the generic existence of fully revealing rational expectations equilibria in smooth economies satisfying additional dimensionality assumptions. Then the rational expectations equilibrium existence problem is related to earlier analysis of informationally decentralized allocation mechanisms. Next the efficiency properties of rational expectations equilibrium allocations are examined. Finally, the possibilities for partially revealing rational expectations equilibria are discussed.