Bargaining and markets: Complexity and the competitive outcome (Q1876641)

The paper investigates the effect of introducing complexity costs of implementing strategies into the dynamic matching and bargaining games. More specifically, it shows that complexity considerations can provide a game-theoretic foundation for the competitive behaviour in decentralised markets with a finite number of agents. Moreover, it shows that in these models, the introduction of complexity costs into players' preferences ensures that in equilibrium, players choose history-independent strategies, sometimes referred to as stationary or Markov strategies.