Markov equilibria in dynamic matching and bargaining games

Douglas Gale, Hamid Sabourian

    Research output: Contribution to journal › Article

    Abstract

    Rubinstein and Wolinsky [Rev. Econ. Stud. 57 (1990) 63] show that a simple homogeneous market with exogenous matching has a continuum of (non-competitive) perfect equilibria; however, the unique Markov-perfect equilibrium of this model is competitive. By contrast, in the more general case of heterogeneous markets, even the Markov property is not enough to guarantee the perfectly competitive outcome. We define a market game that allows for heterogeneous values on both sides of the market and exhibit a number of examples of (non-competitive) Markov-perfect equilibria, with and without discounting. Unlike the homogeneous case, these equilibria allow for inefficient trades and for trade at non-uniform prices. The non-competitive equilibrium may be unique.

    Original languageEnglish (US)
    Pages (from-to)336-352
    Number of pages17
    JournalGames and Economic Behavior
    Volume54
    Issue number2
    DOIs
    StatePublished - Feb 2006

    Fingerprint

    Markov equilibrium
    Bargaining games
    Markov perfect equilibrium
    Discounting
    Perfect equilibrium
    Guarantee
    Market games

    Keywords

    • Bargaining
    • Competition
    • Markov-perfect equilibrium
    • Random matching

    ASJC Scopus subject areas

    • Economics and Econometrics
    • Finance

    Cite this

    Markov equilibria in dynamic matching and bargaining games. / Gale, Douglas; Sabourian, Hamid.

    In: Games and Economic Behavior, Vol. 54, No. 2, 02.2006, p. 336-352.

    Research output: Contribution to journal › Article

    Gale, D & Sabourian, H 2006, 'Markov equilibria in dynamic matching and bargaining games', Games and Economic Behavior, vol. 54, no. 2, pp. 336-352. https://doi.org/10.1016/j.geb.2004.11.004
    Gale D, Sabourian H. Markov equilibria in dynamic matching and bargaining games. Games and Economic Behavior. 2006 Feb;54(2):336-352. https://doi.org/10.1016/j.geb.2004.11.004
    Gale, Douglas ; Sabourian, Hamid. / Markov equilibria in dynamic matching and bargaining games. In: Games and Economic Behavior. 2006 ; Vol. 54, No. 2. pp. 336-352.
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