Sequential Correlated Equilibria in Stopping Games

Operations Research, Forthcoming

35 Pages Posted: 10 Jun 2009 Last revised: 30 Sep 2011

Date Written: September 10, 2009

Abstract

In many situations, such as trade in stock exchanges, agents have many instances to act even though the duration of interactions take a relatively short time. The agents in such situations can often coordinate their actions in advance, but coordination during the game consumes too much time. An equilibrium in such situations has to be sequential in order to handle mistakes made by players. In this paper, we present a new solution concept for infinite-horizon dynamic games, which is appropriate for such situations: a sequential constant-expectation normal-form correlated approximate equilibrium. Under additional assumptions, we show that every such game admits this kind of equilibrium.

Keywords: stochastic games, stopping games, correlated equilibrium, sequential equilibrium, Ramsey Theorem, distribution equilibrium

JEL Classification: C73

Suggested Citation

Heller, Yuval, Sequential Correlated Equilibria in Stopping Games (September 10, 2009). Operations Research, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1417278

Yuval Heller (Contact Author)

Bar Ilan University ( email )

Dept. of Economics, Building 504
Bar Ilan University
Ramat Gan, 5290002
Israel
+972 5252 82182 (Phone)

HOME PAGE: http://https://sites.google.com/site/yuval26/

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