A note on uniqueness in game-theoretic foundations of the reactive equilibrium
- Riley (1979)'s reactive equilibrium concept addresses problems of equilibrium existence in competitive markets with adverse selection. The game-theoretic interpretation of the reactive equilibrium concept in Engers and Fernandez (1987) yields the Rothschild-Stiglitz (1976)/Riley (1979) allocation as an equilibrium allocation, however multiplicity of equilibrium emerges. In this note we imbed the reactive equilibrium's logic in a dynamic market context with active consumers. We show that the Riley/Rothschild-Stiglitz contracts constitute the unique equilibrium allocation in any pure strategy subgame perfect Nash equilibrium.
Author: | Wanda Mimra, Achim Wambach |
---|---|
URN: | urn:nbn:de:hebis:30:3-353062 |
URL: | http://ssrn.com/abstract=2515395 |
DOI: | https://doi.org/10.2139/ssrn.2515395 |
Parent Title (English): | Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 483 |
Series (Serial Number): | CFS working paper series (483) |
Publisher: | Center for Financial Studies |
Place of publication: | Frankfurt, M. |
Document Type: | Working Paper |
Language: | English |
Year of Completion: | 2014 |
Year of first Publication: | 2014 |
Publishing Institution: | Universitätsbibliothek Johann Christian Senckenberg |
Release Date: | 2014/11/03 |
Tag: | asymmetric information; competitive insurance market; contract addition; reactive equilibrium |
Issue: | September 2014 |
Page Number: | 14 |
HeBIS-PPN: | 351158731 |
Institutes: | Wirtschaftswissenschaften / Wirtschaftswissenschaften |
Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS) | |
Dewey Decimal Classification: | 3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft |
Sammlungen: | Universitätspublikationen |
Licence (German): | Deutsches Urheberrecht |