Repeated Games
No tangible link between periods, but players can condition current play on
their information about past actions; can allow new equilibria because players
know have the ability to "reward" or "punish" o
...
Repeated Games
No tangible link between periods, but players can condition current play on
their information about past actions; can allow new equilibria because players
know have the ability to "reward" or "punish" opponents.
Repeating the game doesn’t get rid of any equilibrium outcomes- always have
the static equilibria, which correspond to small discount factors.
Point is to see what happens when the discount factor is not small.
Hard to characterize equilibrium set for fixed discount factor unless exact
efficiency is possible- which it usually isn’t except with perfect monitoring.
(but can be computed and characterized e.g. Cronshaw [1997], Judd,
Yeltekin, Conklin [2003], Abreu and Sannikov [2013] .)
Strongest conclusions when discount factor is very close to 1, and the game is
infinitely repeated- here we have the “folk theorems:” every feasible IR payoff
vector can be supported by an equilibrium.
2
In repeated games with observed actions the folk theorem can be proved
constructively. And observed-actions constructions have been adapted to
“almost perfectly observed” settings, (Hörner-Olszewski [2006]) as well as to
stochastic games with observed actions (Dutta [1995])
Constructive approach harder to apply when not proving folk theorem as need
need some (other) upper bound on equilibrium set.
Hard to say how people “really” play repeated games; some experimental
results by Dal Bo and Frechette [2011], Fudenberg, Dreber, Rand [2012], etc.
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Repeated Games with Public Monitoring
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