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This paper studies generic properties of Markov perfect equilibria in dynamic stochastic games. We show that almost all dynamic stochastic games have a finite number of locally isolated Markov perfect equilibria. These equilibria are essential and strongly stable. Moreover, they all admit purification. To establish these results, we introduce a notion of regularity for dynamic stochastic games and exploit a simple connection between normal form and dynamic stochastic games.
Originally published in Theoretical Economics © 2010 Econometric Society. Made Open Access under a Creative Commons Attribution NonCommercial 3.0 (CC BY-NC 3.0) license.
dynamic stochastic games, Markov perfect equilibria, regularity, genericity, finiteness, strong stability, essentiality, purifiability, estimation, computation, repeated games
Doraszelski, U., & Escobar, J. F. (2010). A Theory of Regular Markov Perfect Equilibria in Dynamic Stochastic Games: Genericity, Stability, and Purification. Theoretical Economics, 5 369-402. http://dx.doi.org/10.3982/TE632
Date Posted: 15 June 2018
This document has been peer reviewed.