Myopic perception in repeated games

Miguel Aramendia and Quan Wen ()

Games and Economic Behavior, 2020, vol. 119, issue C, 1-14

Abstract: In obtaining the celebrated folk theorem, not only everyone must value his future sufficiently high, but also everyone must be perceived so by the others. This common perception of players' time preferences must be maintained even after someone deviates. This paper explores the implications of myopic perception in repeated games with perfect monitoring. Under myopic perception, a deviator will not be perceived as a long-run player in the continuation game, which in turn affects the equilibria in the repeated game before deviation. We develop an algorithm to compute a set that characterizes almost all equilibrium payoffs when the discount factor is sufficiently high. When the stage game has a unique Nash equilibrium and it strictly dominates all other stage-game payoffs, then under myopic perception, the corresponding repeated game has a unique subgame perfect equilibrium.

Keywords: Repeated game; Folk theorem; Stochastic games (search for similar items in EconPapers)
JEL-codes: C72 C73 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0899825619301496
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:119:y:2020:i:c:p:1-14

DOI: 10.1016/j.geb.2019.10.003

Access Statistics for this article

Games and Economic Behavior is currently edited by E. Kalai

More articles in Games and Economic Behavior from Elsevier
Bibliographic data for series maintained by Catherine Liu ().