DP6805 A Theory of Regular Markov Perfect Equilibria in Dynamic Stochastic Games: Genericity, Stability, and Purification

Author(s): Ulrich Doraszelski, Juan Escobar
Publication Date: April 2008
Keyword(s): computation, dynamic stochastic games, essentiality, estimation, finiteness, genericity, Markov perfect equilibrium, purifiability, regularity, repeated games, strong stability
JEL(s): C61, C62, C73
Programme Areas: Industrial Organization
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=6805

This paper develops a theory of regular 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 that are all regular. These equilibria are essential and strongly stable. Moreover, they all admit purification.