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Creator: Bryant, John B. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Department) Number: 144 Mot-clé: Multiple equilibria, Game, Nash equilibrium, and Minimax Assujettir: D50 - General Equilibrium and Disequilibrium: General and C70 - Game Theory and Bargaining Theory: General
Creator: Bryant, John B. Series: Staff report (Federal Reserve Bank of Minneapolis. Research Department) Number: 052 Abstract:
An alternative solution concept is recommended for noncooperative games with multiple equilibra. Players maximize security level in a contracted game. Examples in economics are given in which this solution concept yields a unique solution: a fiat money model, the capital overaccumulation problem, and multiple rational expectations equilibria generally.
Creator: Bryant, John B. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Department) Number: 149 Abstract:
Game theory addresses a problem which is central to economics. Yet, according to the folklore of economics, game theory has failed. This paper argues that this is an incorrect interpretation of the game theory literature. When faced with a well-posed problem, game theory provides a solution. Procedures for facing game theory with well-posed problems are suggested, and examples of economic applications provided. The applications are Samuelson's fiat money model, Phelps' capital overaccumulation problem, multiple rational expectations equilibria, and a bargaining problem.
Mot-clé: Nash equilibrium, Minimax-Nash, and Competitive equilibrium Assujettir: C72 - Noncooperative Games
Creator: Bryant, John B. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Department) Number: 146 Abstract:
The determination of the mechanism for ordering strategies in a game theoretic conflict is the keystone of economic science, at least insofar as economics is to remain an outgrowth of that (otherwise relatively minor) school of English philosophy, Utilitarianism. A method for the solution of the general game is presented in this paper, and the implications for economic theorizing discussed.
Mot-clé: Multiple equilibria, Political economy, Minimax-Nash, Economic theory, and Games Assujettir: C72 - Noncooperative Games and D50 - General Equilibrium and Disequilibrium: General
Creator: Bryant, John B. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Department) Number: 175 Abstract:
Game theory is both at the heart of economics and without a definitive solution. This paper proposes a solution. It is argued that a dominance criterion generates a, and perhaps the, generalized equilibrium solution for game theory. First we provide a set theoretic perspective from which to view game theory, and then present and discuss the proposed solution.
Mot-clé: Nash equilbrium, Dominance, and Equilibria Assujettir: C72 - Noncooperative Games, C68 - Computable General Equilibrium Models, and C70 - Game Theory and Bargaining Theory: General
Creator: Gu, Chao and Wright, Randall D. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Department) Number: 689 Abstract:
We study models of credit with limited commitment, which implies endogenous borrowing constraints. We show that there are multiple stationary equilibria, as well as nonstationary equilibria, including some that display deterministic cyclic and chaotic dynamics. There are also stochastic (sunspot) equilibria, in which credit conditions change randomly over time, even though fundamentals are deterministic and stationary. We show this can occur when the terms of trade are determined by Walrasian pricing or by Nash bargaining. The results illustrate how it is possible to generate equilibria with credit cycles (crunches, freezes, crises) in theory, and as recently observed in actual economies.
Mot-clé: Cycles and Credit Assujettir: E51 - Money Supply; Credit; Money Multipliers and E32 - Business Fluctuations; Cycles
Creator: Huo, Zhen and Ríos-Rull, José-Víctor Series: Staff report (Federal Reserve Bank of Minneapolis. Research Department) Number: 490 Abstract:
We build a variation of the neoclassical growth model in which both wealth shocks (in the sense of wealth destruction) and financial shocks to households generate recessions. The model features three mild departures from the standard model: (1) adjustment costs make it difficult to expand the tradable goods sector by reallocating factors of production from nontradables to tradables; (2) there is a mild form of labor market frictions (Nash bargaining wage setting with Mortensen-Pissarides labor markets); (3) goods markets for nontradables require active search from households wherein increases in consumption expenditures increase measured productivity. These departures provide a novel quantitative theory to explain recessions like those in southern Europe without relying on technology shocks.
Mot-clé: Paradox of thrift, Endogenous productivity, and Great Recession Assujettir: E20 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy: General (includes Measurement and Data), E32 - Business Fluctuations; Cycles, and F44 - International Business Cycles