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Research School of Economics

Event details

Seminar

Date & time

Thursday 20 October 2016
3.30pm–5.00pm

Venue

Fred Gruen Economics Seminar Room, H W Arndt Building 25A, ANU

Speaker

Murali Agastya, The University of Sydney.

Contacts

General Series Coordinator

About the speaker

Murali Agastya, The University of Sydney.

It is optimal for a Decision Maker (D) to switch to a certain action a if she is sufficiently certain that a certain event E has occurred, switch to a different action b if she is sufficiently certain that E has not occurred but keep the status-quo otherwise. There are two other players A and B. A and B are respectively advocates for the actions a and b, they prefer their favorite action is chosen regardless of E. Each period, A and B compete to offer D arguments that will change her posterior for E (and hence switch).

We model competition between the advocates in each period as an all-pay auction and show that there are possibly two types of (stationary) equilibria in this dynamic game. In one, if D is relatively uncertain to begin with, both A and B endogenously cease from trying to influence D, and the status-quo is maintained. In another, there is a tipping point p – if D’s posterior for E is below p, one advocate is more likely to win and above p, the other advocate is more likely to win.

We derive closed form solutions for these equilibria and therefore able to offer various comparative statics.

Afternoon tea available.

The Research School of Economics hosts four active seminar series in Applied Microeconomics, Economic Theory, Macroeconomics as well as a General series. Speakers include international and locally well-known economists.

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