Mimra, Wanda and Wambach, Achim (2016). A note on uniqueness in game-theoretic foundations of the reactive equilibrium. Econ. Lett., 141. S. 39 - 44. LAUSANNE: ELSEVIER SCIENCE SA. ISSN 1873-7374

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Abstract

Riley (1979)'s reactive equilibrium concept addresses the problem of equilibrium existence in competitive markets with adverse selection. The game-theoretic interpretation of the reactive equilibrium concept in Engers and Fernandez (1987) yields the Rothschild and Stiglitz (1976)/Riley (1979) allocation as an equilibrium allocation, however multiplicity of equilibrium emerges. In this note we imbed the reactive equilibrium's logic in a dynamic market context with active consumers. We show that the Riley/Rothschild-Stiglitz contracts constitute the unique equilibrium allocation in any subgame perfect Nash equilibrium. (C) 2016 Elsevier B.V. All rights reserved.

Item Type: Journal Article
Creators:
CreatorsEmailORCIDORCID Put Code
Mimra, WandaUNSPECIFIEDUNSPECIFIEDUNSPECIFIED
Wambach, AchimUNSPECIFIEDUNSPECIFIEDUNSPECIFIED
URN: urn:nbn:de:hbz:38-279700
DOI: 10.1016/j.econlet.2016.01.016
Journal or Publication Title: Econ. Lett.
Volume: 141
Page Range: S. 39 - 44
Date: 2016
Publisher: ELSEVIER SCIENCE SA
Place of Publication: LAUSANNE
ISSN: 1873-7374
Language: English
Faculty: Unspecified
Divisions: Unspecified
Subjects: no entry
Uncontrolled Keywords:
KeywordsLanguage
INSURANCE MARKETS; COMPETITIVE INSURANCE; INFORMATION; SELECTIONMultiple languages
EconomicsMultiple languages
Refereed: Yes
URI: http://kups.ub.uni-koeln.de/id/eprint/27970

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