Characterizing the Feasible Payoff Set of OLG Repeated Games

Daehyun Kim and Chihiro Morooka

Papers from arXiv.org

Abstract: We study the set of (stationary) feasible payoffs of overlapping generation repeated games that can be achieved by action sequences in which every generation of players plays the same sequence of action profiles. First, we completely characterize the set of feasible payoffs given any fixed discount factor of players and the length of interaction. This allows us to obtain the feasible payoff set in closed form. Second, we provide novel comparative statics of the feasible payoff set with respect to the discount factor and the length of interaction. Interestingly, the feasible payoff set becomes smaller as players' discount factor becomes larger. Additionally, we identify a necessary and sufficient condition for this monotonicity to be strict.

Date: 2023-03, Revised 2024-12
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