The Folk Theorem with Endogenous Discounting and Unobserved Mixtures

Asen Kochov and Yangwei Song

No 12066, CESifo Working Paper Series from CESifo

Abstract: We study infinitely repeated games in which the players’ rates of time preference may evolve endogenously in the course of the game. Our goal is to strengthen the folk theorem of Kochov and Song (2023) by relaxing the assumption of observable mixtures. To that end, we identify and impose a new sufficient condition on preferences. The condition holds automatically in the standard case of time-separable utilities and a common discount factor, while being generic in ours.

Keywords: folk theorem; recursive utility; endogenous discounting; unobserved mixtures (search for similar items in EconPapers)
Date: 2025
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