A Few Bad Apples Spoil the Barrel: An Anti-folk Theorem for Anonymous Repeated Games with Incomplete Information

Takuo Sugaya and Alexander Wolitzky

American Economic Review, 2020, vol. 110, issue 12, 3817-35

Abstract: We study anonymous repeated games where players may be "commitment types" who always take the same action. We establish a stark anti-folk theorem: if the distribution of the number of commitment types satisfies a smoothness condition and the game has a "pairwise dominant" action, this action is almost always taken. This implies that cooperation is impossible in the repeated prisoner's dilemma with anonymous random matching. We also bound equilibrium payoffs for general games. Our bound implies that industry profits converge to zero in linear-demand Cournot oligopoly as the number of firms increases.

JEL-codes: C72 C73 D83 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (4)

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DOI: 10.1257/aer.20200068

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