Complexity and Markov Behavior in Bargaining with Investments
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This paper invokes complexity considerations to justify Markov behavior in a non-stationary bargaining model of Che and Sakovics (2004) in which the surplus depends on the players' relationship-specific investments. Using the notion of state complexity and the machine game analysis developed by Lee and Sabourian (2007), it is shown that if the players have lexicographic complexity-averse preferences then every Nash equilibrium of the game must be Markov.
Abstract
This paper invokes complexity considerations to justify Markov behavior in a non-stationary bargaining model of Che and Sakovics (2004) in which the surplus depends on the players' relationship-specific investments. Using the notion of state complexity and the machine game analysis developed by Lee and Sabourian (2007), it is shown that if the players have lexicographic complexity-averse preferences then every Nash equilibrium of the game must be Markov.
참고문헌 (9)
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