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Baron (2001) - Theories of Strategic Nonmarket Participation (view source)
Revision as of 17:31, 5 November 2009
, 17:31, 5 November 2009→Conditions for an SPNE
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:
<math>\{c_Jc_j^*(x),x\}</math> is an SPNE iff: :a) <math>c_Jc_j^*(x)\,</math> is feasible
:b) <math>x^*\,</math>maximizes<math>\quad u_e(x) + c_g^*(x) + c_h^*(x)</math>
:c) <math>\forall j (i \ne j) x^*\,</math>maximizes <math> \quad \{u_e(x) + c_j^*(x) + c_i^*(x)\} + \{u_j(x) - c_j^*(x)\} = \{u_e(x) + u_j(x) + c_i^*(x)\} </math>
