Theoretical Economics

Journal of the Econometric Society

Edited by: Federico Echenique • ISSN (e): 1555-7561 • ISSN (print): 1933-6837

Theoretical Economics: Sep, 2010, Volume 5, Issue 3

A theory of regular Markov perfect equilibria in dynamic stochastic games: genericity, stability, and purification

https://doi.org/10.3982/TE632
p. 369-402

Ulrich Doraszelski, Juan F. Escobar

This paper studies generic properties of Markov perfect equilibria in dynamic stochastic games. We show that almost all dynamic stochastic games have a finite number of locally isolated Markov perfect equilibria. These equilibria are essential and strongly stable. Moreover, they all admit purification. To establish these results, we introduce a notion of regularity for dynamic stochastic games and exploit a simple connection between normal form and dynamic stochastic games.


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