Inefficient stage Nash is not stable

Thomas Norman

Journal of Economic Theory, 2018, vol. 178, issue C, 275-293

Abstract: It is shown that, in infinitely-repeated games between two arbitrarily patient players, strategy profiles with inefficient pure stage-Nash continuations are not strategically stable (Kohlberg and Mertens, 1986). By contrast, a set of strategy profiles similar to the Prisoners' Dilemma's “perfect tit-for-tat” is “uniformly robust to perfect entrants” (Swinkels, 1992), and hence contains a strategically stable set. Moreover, this set satisfies iterated dominance and a version of forward induction, whilst its stable subset is admissible.

Keywords: Repeated games; Strategic stability; Evolutionary stability (search for similar items in EconPapers)
JEL-codes: C72 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:178:y:2018:i:c:p:275-293

DOI: 10.1016/j.jet.2018.09.009

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