Abstract
We study the relation between dynamical systems describing the equilibrium behavior in dynamic games and those resulting from (single-player) dynamic optimization problems. More specifically, we derive conditions under which the dynamics generated by a model in one of these two classes can be rationalized by a model from the other class. We study this question under different assumptions about which fundamentals (e.g. technology, utility functions and time-preference) should be preserved by the rationalization. One interesting result is that rationalizing the equilibrium dynamics of a symmetric dynamic game by a dynamic optimization problem that preserves the technology and the utility function requires a higher degree of impatience compared to that of the players in the game.
Original language | English |
---|---|
Pages (from-to) | 361-379 |
Number of pages | 19 |
Journal | International Journal of Economic Theory |
Volume | 8 |
Issue number | 4 |
DOIs | |
Publication status | Published - 2012 Dec |
Keywords
- C73
- Dynamic games
- Dynamic optimization
- O41
- Q50
- Rationalizability
ASJC Scopus subject areas
- Economics and Econometrics