Renegotiation and Symmetry in Repeated Games

David G. Pearce, Dilip Abreu and Ennio Stacchetti
Additional contact information
David G. Pearce: Cowles Foundation, Yale University, https://cowles.yale.edu/
Dilip Abreu: Princeton University
Ennio Stacchetti: Stanford University

No 920, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: It seems reasonable to suppose that in repeated games in which communications is possible, play is determined through a process of negotiation and renegotiation as events unfold. In the absence of a satisfying theory of players' bargaining power, it is unclear how to model this process. Symmetric repeated games are an important class in which the problem is less troublesome. Whatever its source, bargaining power is presumably the same for all players in a symmetric game. We take equal bargaining power to mean that a player can mount a credible objection to a continuation equilibrium in which he receives a particular expected present discounted value, if there are other self enforcing agreements that never give any player such a low continuation value after any history. This is formalized in a solution concept called consistent bargaining equilibrium.

Keywords: Repeated games; negotiation; bargaining theory; symmetric game; monitoring (search for similar items in EconPapers)
Pages: 35 pages
Date: 1989-05
Note: CFP 852.
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published in Journal of Economic Theory (August 1993), 60(2): 217-240

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