General equilibrium is timeless, and without outside money, the price system is homogeneous of order zero. Some finite horizon strategic market game models are considered with an initial issue of flat money held as an asset. For any arbitrary finite horizon, the solution is time-dependent. In the infinite horizon, time disappears with the initial issue of flat money present as circulating capital in the fully stationary state and the price level is determined.
General equilibrium is timeless, and without outside money, the price system is homogeneous of order zero. Some finite horizon strategic market game models are considered with an initial issue of flat money held as an asset. For any arbitrary finite horizon, the solution is time-dependent. In the infinite horizon, time disappears with the initial issue of flat money present as circulating capital in the fully stationary state and the price level is determined.
(Editor) A reprinted issue of the journal Economic Notes (v. 22, no. 2, 1993), published by Monte dei Paschi di Siena (Italy). It presents the proceedings of the conference “Accounting and Economics,” held in Siena in November 1992, in honor of the 500th anniversary of the publication of Luca Pacioli’s Summa de Arithmetica, Geometria, Proportioni et Proportionalita.
We study stationary Markov equilibria for strategic, competitive games, in a market-economy model with one non-durable commodity, fiat money, borrowing/lending through a central bank or a money market, and a continuum of agents. These use fiat money in order to offset random fluctuations in their endowments of the commodity, are not allowed to borrow more than they can pay back (secured lending), and maximize expected discounted utility from consumption of the commodity. Their aggregate optimal actions determine dynamically prices and/or interest rates for borrowing and lending, in each period of play. In equilibrium, random fluctuations in endowment- and wealth-levels offset each other, and prices and interest rates remain constant.
As in our related recent work, KSS (1994), we study in detail the individual agents’ dynamic optimization problems, and the invariance measures for the associated, optimally controlled Markov chains. By appropriate aggregation, these individual problems lead to the construction of stationary Markov competitive equilibrium for the economy as a whole.
Several examples are studied in detail, fairly general existence theorems are established, and open questions are indicated for further research.
Consider a repeated bimatrix game. We define “bugs” as players whose “strategy” is to react myopically to whatever the opponent did on the previous iteration. We believe that in some contexts this is a more realistic model of behavior than the standard “supremely rational” noncooperative game player.
We consider possible outcome paths that can occur as the result of bugs playing a game. We also compare how bugs fare over a suitable “universe of games,” as compared with standard “Nash” players and “maximin” players.
We show that if y is an odd integer between 1 and 2n - 1, there is an n × n bimatrix game with exactly y Nash equilibria (NE). We conjecture that this 2n - 1 is a tight upper for n < 3, and provide bounds on the number of NEs in m × n nondegenerate games when min(m,n) < 4.
A simple game-theoretic model of migration is proposed, in which the players are animals, the strategies are territories in a landscape to which they may migrate, and the payoffs for each animal are determined by its ultimate location and the number of other animals there. If the payoff to an animal is a decreasing function of the number of other animals sharing its territory, we show the resultant game has a pure strategy Nash equilibrium (PSNE). Furthermore, this PSNE is generated via “natural” myopic behavior on the part of the animals.
Finally, we compare this type of game with congestion games and potential games.
A sketch of a game theoretic approach to the Theory of Money and Financial Institutions is presented in a nontechnical, nonmathematical manner. The detailed argument and specifics are presented in previous articles and in a forthcoming book.