The folk theorem revisited

James Bergin

Economic Theory, 2006, vol. 27, issue 2, 332 pages

Abstract: This paper develops a simple “instant-response” model of strategic behavior where players can react instantly to changing circumstances, but at the same time face some inertia after changing action. The framework is used to reconsider the folk theorem and, in particular, the role of the key condition of dimensionality. In contrast to the discounted case in discrete time, here low dimensionality may help support equilibria because it is more difficult for a potential deviator or punisher to defect beneficially. Copyright Springer-Verlag Berlin/Heidelberg 2006

Keywords: Instant response; Folk theorem. (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (5)

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DOI: 10.1007/s00199-004-0580-7

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