Questions tagged [equilibrium-selection]

The equilibrium selection tag applies to question which deal with the issue of selecting one or more out of multiple equilibria based on some criterion.

Filter by
Sorted by
Tagged with
0 votes
0 answers

How do I show that if there are more than 2 types in a signaling game, then multiple equilibria satisfy the intuitive criterion?

I'm trying to figure out why in a signaling game with more than 2 types, multiple equilibria with different equilibrium strategies satisfy the intuitive criterion. Take the classic Spence job market ...
Ludwig Gershwin's user avatar
1 vote
0 answers

Why Sequenial Equilibrium (SE) imposes no restrictions on the off-equilibrium beliefs in the Spence's model?

I read some lectures on the Spence's model. Some (see e.g. P31 of lecture PPT from MIT game thoery course) mention that SE imposes no restrictions on the off-equilibrium beliefs but without proof. I ...
DevinY's user avatar
  • 75
3 votes
1 answer

Sequential Equilibrium (SE) and Perfect Bayesian Equilibrium (PBE) in signaling games

I know that in the paper "Perfect Bayesian equilibrium and sequential equilibrium", the authors proved that for signaling games (considering the simple case that there are two periods and ...
DevinY's user avatar
  • 75
0 votes
1 answer

Refinements in signaling games with three sender types

What are the pros and cons of the Intuitive Criterion and the Criterion of Divinity in signaling games with three types? I find that separating equilibria often survive the intuitive criterion, ...
Lotte's user avatar
  • 1
-2 votes
1 answer

Equation: If the equilibrium level of GDP is $21,500, what is the marginal propensity to consume?

Equations for $C$, $I$, $G$, and $NX$ are given below. If the equilibrium level of $GDP$ is $\$21,500$, what is the marginal propensity to consume? $$C = 1,500 + (MPC)\cdot Y$$ $$I = 1,000$$ $$G = 2,...
Christina Campbell's user avatar
4 votes
1 answer

What is time inconsistency in monetary policy?

I am reading through a bit of policy literature and see authors referring often to the problem of time inconsistency when setting monetary policy. Can anyone explain what is time inconsistency? An ...
helpmebros's user avatar
5 votes
1 answer

How does Brouwer's fixed point theorem relate to Walrasian equilibrium?

I am trying to understand Walrasian equilibrium and its connection to fixed points, especially how we can apply Brouwer’s fixed point theorem to the notion of Walrasian equilibrium. I understand the ...
Robert Brown's user avatar
2 votes
1 answer

Refinements of Walrasian equilibrium

In Walrasian equilibrium there is a market clearing price, that is $$ D(p) = S(p) $$ or the supply is worthless, so you can have $$ D(p) < S(p) \mbox{ if } p = 0. $$ This can be summarized as $$ p \...
Giskard's user avatar
  • 29.5k
5 votes
1 answer

Divinity for Dummies

I understood the general idea of divinity: that it helps to rule out "unreasonable" equilibria. However, can someone explain it in more details with simple examples so that a senior undergrad student ...
Beck's user avatar
  • 151