Instability of belief-free equilibria
Yuval Heller ()
Journal of Economic Theory, 2017, vol. 168, issue C, 261-286
Various papers have presented folk theorem results for repeated games with private monitoring that rely on belief-free equilibria. I show that these equilibria are not robust against small perturbations in the behavior of potential opponents. Specifically, I show that essentially none of the belief-free equilibria is evolutionarily stable, and that in generic games none of these equilibria is neutrally stable. Moreover, in a large family of games (which includes many public good games), the belief-free equilibria fail to satisfy even a very mild stability refinement.
Keywords: Belief-free equilibrium; Evolutionary stability; Private monitoring; Repeated Prisoner's Dilemma; Communication (search for similar items in EconPapers)
JEL-codes: C73 D82 (search for similar items in EconPapers)
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Working Paper: Instability of Belief-free Equilibria (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:168:y:2017:i:c:p:261-286
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