Regime Switching in Dynamic Games with Hyperbolic Discounting

Explore a 48-minute webinar on regime switching in dynamic games with hyperbolic discounting, presented by Jorge Navas from Universitat de Barcelona, Spain, at the GERAD Research Center. Delve into the complexities of dynamic optimization problems with endogenous regime shifts, focusing on the challenges of characterizing optimal switching times as Markovian strategies in dynamic games. Examine the extension of previous results on regime shifts in the context of dynamic games and non-constant discounting. Analyze a resource extraction model with technology adoption, first considering a single decision-maker with time-inconsistent preferences, then expanding to a two-player scenario. Cover topics such as heterogeneous discounting, dynamic programming equations in continuous time, cooperative solutions in two-player differential games, and non-totally rational switching point proposals. Gain insights into numerical examples, including new product introduction and endogenous regime shifts with multiple decision-makers under standard discounting.

Intro
Motivation
Outline of the presentation
Previous works endogenous regime shifts with standard discounting
Previous works: endogenous regime shifts with time-inconsistent temporal preferences
A reminder: time consistent strategies with non-constant discounting
Heterogeneous discounting
Dynamic programming equation (DPE) in continuous time
Cooperative solutions in a two-player differential game
The switching point: a non totally rational proposal
Numerical example: A resource extraction model with technology adoption
Numerical example: New product introduction
Previous works: Endogenous regime swifts. Several decision makers. Standard discounting