Markov distributional equilibrium dynamics in games with complementarities and no aggregate risk

Łukasz Balbus, Pawel Dziewulski, Kevin Reffett, Łukasz Wozny

We present a new approach to studying equilibrium dynamics in a class of stochastic games with a continuum of players with private types and strategic complementarities. We introduce a suitable equilibrium concept, called Markov Stationary Nash Distributional Equilibrium (MSNDE), prove its existence, and determine comparative statics of equilibrium paths and the steady state invariant distributions to which they converge. Finally, we provide numerous applications of our results including: dynamic models of growth with status concerns, social distance, and paternalistic bequests with endogenous preferences for consumption.

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Year of publication:	2022
Authors:	Balbus, Lukasz ; Dziewulski, Pawel ; Reffett, Kevin L. ; Woźny, Łukasz
Published in:	Theoretical economics : TE ; an open access journal in economic theory. - Toronto : [Verlag nicht ermittelbar], ISSN 1555-7561, ZDB-ID 2220447-7. - Vol. 17.2022, 2, p. 725-762
Subject:	Large games \| distributional equilibria \| supermodular games \| comparative dynamics \| non-aggregative games \| social interactions \| Spieltheorie \| Game theory \| Nash-Gleichgewicht \| Nash equilibrium \| Markov-Kette \| Markov chain \| Soziale Beziehungen \| Social relations \| Dynamisches Spiel \| Dynamic game