DP7323 Finite State Dynamic Games with Asymmetric Information: A Framework for Applied Work
|Author(s):||Chaim Fershtman, Ariel Pakes|
|Publication Date:||June 2009|
|Keyword(s):||Applied Markov Equilibrium, Dynamic Games, Dynamic Oligopoly|
|JEL(s):||C63, C73, L13|
|Programme Areas:||Industrial Organization|
|Link to this Page:||www.cepr.org/active/publications/discussion_papers/dp.php?dpno=7323|
With applied work in mind, we define an equilibrium notion for dynamic games with asymmetric information which does not require a specification for players' beliefs about their opponent types. This enables us to define equilibrium conditions which, at least in principal, are testable and can be computed using a simple reinforcement learning algorithm. We conclude with an example that endogenizes the maintenance decisions for electricity generators in a dynamic game among electric utilities in which the costs states of the generators are private information.