THE FOLK THEOREM IN REPEATED GAMES WITH DISCOUNTING OR WITH INCOMPLETE INFORMATION

Drew Fudenberg and Eric Maskin

Chapter 11 in A Long-Run Collaboration on Long-Run Games, 2008, pp 209-230 from World Scientific Publishing Co. Pte. Ltd.

Abstract: AbstractWhen either there are only two players or a “full dimensionality” condition holds, any individually rational payoff vector of a one-shot game of complete information can arise in a perfect equilibrium of the infinitely-repeated game if players are sufficiently patient. In contrast to earlier work, mixed strategies are allowed in determining the individually rational payoffs (even when only realized actions are observable). Any individually rational payoffs of a one-shot game can be approximated by sequential equilibrium payoffs of a long but finite game of incomplete information, where players' payoffs are almost certainly as in the one-shot game.

Keywords: Long-Run Players; Limit Games; Robustness; Equilibrium; Reputation Effects; Repeated Games (search for similar items in EconPapers)
JEL-codes: I10 (search for similar items in EconPapers)
Date: 2008
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Related works:
Journal Article: The Folk Theorem in Repeated Games with Discounting or with Incomplete Information (1986)
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