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Dynamic Games and Applications

, Volume 9, Issue 2, pp 314–365 | Cite as

Strategic Growth with Recursive Preferences: Decreasing Marginal Impatience

  • Luis AlcaláEmail author
  • Fernando Tohmé
  • Carlos Dabús
Article
  • 52 Downloads

Abstract

This paper studies a two-agent strategic model of capital accumulation with heterogeneity in preferences and income shares. Preferences are represented by recursive utility functions that satisfy decreasing marginal impatience. The stationary equilibria of this dynamic game are analyzed under two alternative information structures: one in which agents precommit to future actions, and another one where they use Markovian strategies. In both cases, we develop sufficient conditions to show the existence of these equilibria and characterize their stability properties. Under certain regularity conditions, a precommitment equilibrium shows monotone convergence of aggregate variables, but Markovian equilibria may exhibit nonmonotonic paths, even in the long-run.

Keywords

Recursive utility Decreasing impatience Dynamic programming Precommitment strategies Markovian strategies 

Notes

Acknowledgements

Luis Alcalá acknowledges financial support from the Universidad Nacional de San Luis, through Grant PROICO 319502, and from the Consejo Nacional de Investigaciones Científicas y Técnicas (CONICET), through Grant PIP 112-200801-00655. We thank an associate editor and an anonymous referee whose insightful comments and detailed suggestions led to significant improvements of the paper.

Supplementary material

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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Departamento de Matemática, Instituto de Matemática Aplicada-San Luis (IMASL)Universidad Nacional de San Luis-CONICETSan LuisArgentina
  2. 2.Departamento de Economía, Instituto de Matemática de Bahía Blanca (INMABB)Universidad Nacional del Sur-CONICETBahía BlancaArgentina
  3. 3.Departamento de Economía, Instituto de Investigaciones Económicas y Sociales del Sur (IIESS)Universidad Nacional del Sur-CONICETBahía BlancaArgentina

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