Folk theorems in repeated games with switching costs

Yevgeny Tsodikovich, Xavier Venel and Anna Zseleva

Games and Economic Behavior, 2024, vol. 146, issue C, 137-159

Abstract: We study how switching costs affect the subgame perfect equilibria in repeated games. We show that (i) the Folk Theorem holds whenever the players are patient enough; (ii) the set of equilibrium payoffs is obtained by considering the payoffs of a simple one-shot auxiliary game; and (iii) the switching costs have a negative impact on a player in the infinitely undiscounted repeated game but can be beneficial for him in a finitely repeated game or in a discounted game.

Keywords: Switching costs; Repeated games; Folk theorem; Stochastic games; Non-zero-sum games (search for similar items in EconPapers)
JEL-codes: C73 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:146:y:2024:i:c:p:137-159

DOI: 10.1016/j.geb.2024.05.006

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