A note on ”Necessary and sufficient conditions for the perfect finite horizon folk theorem” [Econometrica, 63 (2): 425-430, 1995.]

Ghislain-Herman Demeze-Jouatsa
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Ghislain-Herman Demeze-Jouatsa: Center for Mathematical Economics, Bielefeld University

No 583, Center for Mathematical Economics Working Papers from Center for Mathematical Economics, Bielefeld University

Abstract: Smith (1995) presented a necessary and sufficient condition for the finite- horizon perfect folk theorem. In the proof of this result, the author constructed a family of five-phase strategy profiles to approach feasible and individually rational payoff vec- tors of the stage-game. These strategy profiles are not subgame perfect Nash equilibria of the finitely repeated game. I illustrate this fact with a counter-example. However, the characterization of attainable payoff vectors by Smith remains true. I provide an alternative proof.

Keywords: Finitely Repeated Games; Subgame Perfect Nash Equilibrium; Folk Theorem; Discount Factor (search for similar items in EconPapers)
Pages: 19
Date: 2018-08-13
New Economics Papers: this item is included in nep-gth
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