Subgame-perfect equilibrium in games with almost perfect information: dispensing with public randomization

Paulo Barelli and John Duggan ()
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John Duggan: Department of Political Science and Department of Economics, University of Rochester

Theoretical Economics, 2021, vol. 16, issue 4

Abstract: Harris, Reny, and Robson (1995) add a public randomization device to dynamic games with almost perfect information to ensure existence of subgame perfect equilibria (SPE). We show that when Nature's moves are atomless in the original game, public randomization does not enlarge the set of SPE payoffs: any SPE obtained using public randomization can be ``de-correlated" to produce a payoff-equivalent SPE of the original game. As a corollary, we provide an alternative route to a result of He and Sun (2020) on existence of SPE without public randomization, which in turn yields equilibrium existence for stochastic games with weakly continuous state transitions.

Keywords: Existence; subgame-perfect equilibrium; infinite-action games; stochastic games; public randomization (search for similar items in EconPapers)
JEL-codes: C72 C73 (search for similar items in EconPapers)
Date: 2021-11-08
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