Parabolic Cylinders and Folk Theorems

Flavio Delbono and Luca Lambertini ()

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

Abstract: We study a class of games featuring payoff functions being parabolic cylinders where best reply functions are orthogonal and therefore the pure-strategy non-cooperative solution is attained as a Nash equilibrium in dominant strategies. We prove that the resulting threshold of the discount factor above which implicit collusion on the Pareto frontier is stable in the infi?nite supergames is independent of the number of players. This holds irrespective of whether punishment is based on in?finite Nash reversion or one-shot stick-and-carrot strategy. We outline two examples stemming from economic theory and one from international relations.

JEL-codes: C73 (search for similar items in EconPapers)
Date: 2015-12
New Economics Papers: this item is included in nep-gth, nep-hpe and nep-mic
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