Supporting Others and the Evolution of Influence

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Abstract

In this paper we study environments in which agents can transfer influence to others by supporting them. When planning whom to support, they should take into account the future effect of this, since the receiving agent might use this influence to support others in the future. We show that in the presence of a finite horizon there is an essentially unique optimal support behavior which can be characterized in terms of associated marginal value functions. The analysis of these marginal value functions allows us to derive qualitative properties of optimal support strategies under different specific environments and to explicitly compute the optimal support behavior in some numerical examples. We also investigate the case of an infinite horizon. Examples show that multiple equilibria may appear in this setting, some of which sustaining a degree of cooperation that would not be possible under a finite horizon.
Original languageEnglish
Pages (from-to)2051-2092
JournalJournal of Economic Dynamics & Control
Volume26
DOIs
Publication statusPublished - 1 Jan 2002

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