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Application of Mean Field Games to Growth Theory

Lasry, Jean-Michel; Lions, Pierre-Louis; Guéant, Olivier (2008), Application of Mean Field Games to Growth Theory. https://basepub.dauphine.fr/handle/123456789/3071

Type
Document de travail / Working paper
External document link
http://hal.archives-ouvertes.fr/hal-00348376/en/
Date
2008
Publisher
Université Paris-Dauphine
Published in
Paris
Pages
17
Metadata
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Author(s)
Lasry, Jean-Michel
Lions, Pierre-Louis
Guéant, Olivier
Abstract (EN)
This article discusses the interaction between economic growth in the sense of human capital accumulation and the dynamics of inequalities. We use a mean-field game framework in which individuals improve their human capital both to improve their wages and to avoid potential competition with less skilled individuals. Our contribution is twofold. First, we exhibit a mechanism in which competition between a continuum of people regarding human capital accumulation lead to growth. Second, our model highlights the importance of Pareto distributions to describe inequalities since power laws appear naturally as explicit solutions of our problem.
Subjects / Keywords
Mean-field Models
JEL
C7 - Game Theory and Bargaining Theory
F43 - Economic Growth of Open Economies