A simple case of rationality of escalation

DOI10.1007/978-3-642-40206-7_15MaRDI QIDQ2848948zbMATH OpenOpenAlexFDO

Authors Pierre Lescanne

Publication date 13 September 2013

Published in Algebra and Coalgebra in Computer Science (Search for Journal in Brave)

Full work available at URL https://arxiv.org/abs/1306.2284

zbMATH Keywords

escalationinfinite gamecoinductionauctioncrashsequential gamespeculative bubbleeconomic game

Mathematics Subject Classification ID

Rationality and learning in game theory (91A26)

Abstract: Escalation is the fact that in a game (for instance an auction), the agents play forever. It is not necessary to consider complex examples to establish its rationality. In particular, the $0,1$-game is an extremely simple infinite game in which escalation arises naturally and rationally. In some sense, it can be considered as the paradigm of escalation. Through an example of economic games, we show the benefit economics can take of coinduction.

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Cited in

(1)

• ``Backward coinduction, Nash equilibrium and the rationality of escalation

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