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PKP Metadata Items |
Metadata for this document |
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| 1. |
Title |
Title of document |
Games with switching costs and endogenous references |
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| 2. |
Creator |
Author's name, affiliation |
Begum Guney; Department of Economcis, Ozyegin University |
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| 2. |
Creator |
Author's name, affiliation |
Michael Richter; Baruch College, Zicklin School of Business and Royal Holloway, University of London |
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Subject |
Subject(s) |
Switching cost Nash equilibrium, choice, endogenous reference, switching costs, epsilon equilibrium |
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Subject |
Subject classification |
D00, D01, D03, C72 |
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| 4. |
Description |
Abstract |
We introduce a game-theoretic model with switching costs and endogenous references. An agent endogenizes his reference strategy and then, taking switching costs into account, he selects a strategy from which there is no profitable deviation. We axiomatically characterize this selection procedure in one-player games. We then extend this procedure to multi-player simultaneous games by defining a Switching Cost Nash Equilibrium (SNE) notion, and prove that (i) an SNE always exists; (ii) there are sets of SNE which can never be a set of Nash Equilibrium for any standard game; and (iii) SNE with a specific cost structure exactly characterizes the Nash Equilibrium of nearby games, in contrast to Radner's (1980) $\varepsilon$-equilibrium. Subsequently, we apply our SNE notion to a product differentiation model, and reach the opposite conclusion of Radner (1980): switching costs for firms may benefit consumers. Finally, we compare our model with others, especially K\"{o}szegi and Rabin's (2006) personal equilibrium. |
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Publisher |
Organizing agency, location |
Econometric Society |
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Contributor |
Sponsor(s) |
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| 7. |
Date |
(YYYY-MM-DD) |
2022-05-05 |
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Type |
Status & genre |
Peer-reviewed Article |
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Type |
Type |
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Format |
File format |
pdf
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| 10. |
Identifier |
Universal Resource Indicator |
https://econtheory.org/ojs/index.php/te/article/view/20220617 |
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| 11. |
Source |
Journal/conference title; vol., no. (year) |
Theoretical Economics; Volume 17, Number 2 (May 2022) |
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Language |
English=en |
en |
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Rights |
Copyright and permissions |
Authors who publish in Theoretical Economics will release their articles under the Creative Commons Attribution-NonCommercial license. This license allows anyone to copy and distribute the article for non-commercial purposes provided that appropriate attribution is given. |