Mediated subgame perfect equilibrium

Christian Ewerhart and Haoyuan Zeng

No 484, ECON - Working Papers from Department of Economics - University of Zurich

Abstract: This paper studies mediation in infinitely repeated games with perfect monitoring. In departure from the literature, we assume that all private messages and internal records are publicly revealed at the end of each stage. We call the resulting equilibrium concept mediated subgame perfect equilibrium (MSPE). It is shown that the revelation principle holds. We introduce an effective correlated minimax value, which can be conveniently determined as the solution of a linear program, and use it to derive necessary and sufficient conditions for the implementability of payoffs under an MSPE. These conditions are standard for two-player games with a sufficient degree of patience but are, in general, strictly more permissive. Examples illustrate the impact of effective correlated minimax profiles and the subtle role of internal records.

Keywords: Infinitely repeated games; mediation; revelation principle; perfect folk theorem; effective minimax value; correlated equilibrium; threat points (search for similar items in EconPapers)
JEL-codes: C72 C73 (search for similar items in EconPapers)
Date: 2026-01
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