Computational Economics

, Volume 29, Issue 1, pp 69–96

Comparative dynamics in an overlapping-generations model: the effects of quasi-rational discrete choice on finding and maintaining Nash equilibrium

Article

DOI: 10.1007/s10614-006-9081-z

Cite this article as:
Sprigg, J.A. & Ehlen, M.A. Comput Econ (2007) 29: 69. doi:10.1007/s10614-006-9081-z

Abstract

Many models of Nash Equilibrium are complex enough that it becomes difficult to ascertain if and under what conditions the economic players can find and maintain this equilibrium. Using an analytical overlapping- generations model of goods, labor, and banking markets and quasi-rational discrete choice decision making, we find through agent-based simulations that Nash Equilibrium in goods market prices is stable when firms are sufficiently sensitive to changes in profits. In addition to verifying the analytical Nash outcome, the simulations verify that their economic agents, decision rules, and other protocols correspond to and maintain consistency with the analytical theory and identify important bounds of the analytical model.

Keywords

Quasi rationality Discrete choice Life-cycle hypothesis Nash equilibrium Overlapping generations Agent-based simulation 

Jel classification

C62 C63 D91 

Copyright information

© Springer Science+Business Media, LLC 2007

Authors and Affiliations

  1. 1.Exploratory Simulation TechnologiesSandia National LaboratoriesAlbuquerqueUSA
  2. 2.Computational Economics GroupSandia National LaboratoriesAlbuquerqueUSA

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