You are not currently logged in.
Access JSTOR through your library or other institution:
When Are Agents Negligible?
David K. Levine and Wolfgang Pesendorfer
The American Economic Review
Vol. 85, No. 5 (Dec., 1995), pp. 1160-1170
Published by: American Economic Association
Stable URL: http://www.jstor.org/stable/2950981
Page Count: 11
You can always find the topics here!Topics: Economic theory, Capital investments, Taxes, Economic capital, Prices, Economic models, Market prices, Investment tax credits, Paradoxes, Shareholders
Were these topics helpful?See something inaccurate? Let us know!
Select the topics that are inaccurate.
Preview not available
We examine the following paradox: in a dynamic setting, equilibria can be radically different in a model with a finite number of agents than in a model with a continuum of agents. We present a simple strategic setting in which this paradox is a general phenomenon. However, the paradox disappears when there is noisy observation of the players' actions, and the aggregate level of noise does not disappear too rapidly as the number of players increases. We give several economic examples in which this paradox has recently received attention: durable-goods monopoly, corporate takeovers, and time consistency of optimal government policy.
The American Economic Review © 1995 American Economic Association