A 'Super' Folk Theorem for Dynastic Repeated Games

Luca Anderlini, Dino Gerardi and Roger Lagunoff

Working Papers from Georgetown University, Department of Economics

Abstract: We analyze "dynastic" repeated games. A stage game is repeatedly played by successive generations of finitely-lived players with dynastic preferences. Each individual has preferences that replicate those of the infinitely-lived players of a standard discounted infinitely-repeated game. When all players observe the past history of play, the standard repeated game and the dynastic game are equivalent In our model all players live one period and do not observe the history of play that takes place before their birth, but instead receive a private message from their immediate predecessors. Under very mild conditions, when players are sufficiently patient, all feasible payoff vectors (including those below the minmax of the stage game) can be sustained as a Sequential Equilibrium of the dynastic repeated game with private communication. The result applies to any stage game for which the standard Folk Theorem yields a payoff set with a non-empty interior. We are also able to characterize entirely when a Sequential Equilibrium of the dynastic repeated game can yield a payoff vector not sustainable as a Subgame Perfect Equilibrium of the standard repeated game. For this to be the case it must be that the players' equilibrium beliefs violate a condition that we term "Inter-Generational Agreement."

Keywords: Dynastic Repeated Games; Private Communication; Folk Theorem (search for similar items in EconPapers)
JEL-codes: C72 C73 D82 (search for similar items in EconPapers)
Date: 2006-06-01
New Economics Papers: this item is included in nep-gth and nep-ind
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: A “Super” Folk Theorem for dynastic repeated games (2008)
Working Paper: A 'Super' Folk Theorem for Dynastic Repeated Games (2006)
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