Perfect public equilibrium when players are patient

Drew Fudenberg, David Levine and Satoru Takahashi

Chapter 16 in A Long-Run Collaboration on Long-Run Games, 2008, pp 345-367 from World Scientific Publishing Co. Pte. Ltd.

Abstract: AbstractWe provide a characterization of the limit set of perfect public equilibrium payoffs of repeated games with imperfect public monitoring as the discount factor goes to one. Our result covers general stage games including those that fail a “full-dimensionality” condition that had been imposed in past work. It also provides a characterization of the limit set when the strategies are restricted in a way that endogenously makes the full-dimensionality condition fail, as in the strongly symmetric equilibrium studied by Abreu [Abreu, D., 1986. Extremal equilibria of oligopolistic supergames. J. Econ. Theory 39, 191–228] and Abreu et al. [Abreu, D., Pearce, D., Stacchetti, E., 1986. Optimal cartel equilibria with imperfect monitoring. J. Econ. Theory 39, 251–269]. Finally, we use our characterization to give a sufficient condition for the exact achievability of first-best outcomes. Equilibria of this type, for which all continuation payoffs lie on the Pareto frontier, have a strong renegotiation-proofness property: regardless of the history, players can never unanimously prefer another equilibrium.

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: Perfect public equilibrium when players are patient (2007)
Working Paper: Perfect Public Equilibrium When Players Are Patient (2007)
Working Paper: Perfect Public Equilibrium When Players are Patient (2004)
Working Paper: Perfect Public Equilibrium When Players Are Patient (2004)
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