Strategic Growth with Recursive Preferences: Decreasing Marginal Impatience
Optimization and Control
2016-08-26 v1 Economics
Abstract
We study the interaction between strategy, heterogeneity and growth in a two-agent model of capital accumulation. Preferences are represented by recursive utility functions with decreasing marginal impatience. The stationary equilibria of this dynamic game are analyzed under two alternative information structures: one in which agents precommit to future actions, and another one where agents use Markovian strategies. In both cases, we develop sufficient conditions to prove the existence of equilibria and characterize their stability properties. The precommitment case is characterized by monotone convergence, but Markovian equilibria may exhibit nonmonotonic paths, even in the long-run.
Cite
@article{arxiv.1608.06959,
title = {Strategic Growth with Recursive Preferences: Decreasing Marginal Impatience},
author = {Luis Alcala and Fernando Tohme and Carlos Dabus},
journal= {arXiv preprint arXiv:1608.06959},
year = {2016}
}
Comments
55 pages, 14 figures, 2 tables