Endogenous economic policy - Policy games
3 important questions on Endogenous economic policy - Policy games
What is a dominant strategy in policy games?
That the optimal choice is always the same for a player, no matter what the opponent chooses
Where does inflation bias comes from?
Trade unions know that inflating is the dominant strategy for governments, so they expect inflation. Expecting inflation and actual inflation creates inflation bias
What is time inconsistency?
The concept when a policy seems optimal today but not anymore when it is time to act
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