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Baron (2001) - Theories of Strategic Nonmarket Participation (view source)
Revision as of 19:14, 29 September 2020
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|Has page=Baron (2001) - Theories of Strategic Nonmarket Participation
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|Has article title=Theories of Strategic Nonmarket Participation
|Has author=Baron
|Has year=2001
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*This page is part of a series under [[PHDBA279A]]
*This page is referenced in [[BPP Field Exam Papers]]
===Conditions for an SPNE===
Baron (or Rui) define equilibrium as a triple <math>c_{g}^{\ast}(x), c_{h}^{\ast}(x), x^{\ast})</math> is defined as:
* <math>x^{\ast}\in\arg\max_{x}[u_{e}(x)+c_{g}^{\ast}(x)+c_{h}^{\ast}(x)]</math>.
* <math>c_{j}^{\ast}\in\arg\max_{c_{j}}[-\beta[x^{\ast}-z_{j}]^{2}-c_{j}^{\ast}(x^{\ast})]m j=g,h</math>.
* <math>c_{j}=\tau_{j}+u_{j}(x), j=h,g</math>, "Truth Telling."
Bernheim and Whinston (1984) provide four necessary and sufficient conditions for a sub-game perfect Nash equilibrium in this model. In the notion of the model, these are:
