Folk Theorems in Repeated Games with Switching Costs

Yevgeny Tsodikovich, Xavier Venel () and Anna Zseleva ()
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Yevgeny Tsodikovich: Bar-Ilan University [Israël]
Xavier Venel: LUISS - Libera Università Internazionale degli Studi Sociali Guido Carli [Roma]
Anna Zseleva: Maastricht University [Maastricht]

Working Papers from HAL

Abstract: We study how switching costs affect the sub-game perfect equilibria in repeated games. We show that (i) the Folk Theorem holds whenever the players are patient enough; (ii) the set of equilibrium payoffs is obtained by considering the payoffs of a simple one-shot auxiliary game; and (iii) the switching costs have a negative impact on a player in the infinitely undiscounted repeated game but can be beneficial for him in a finitely repeated game or in a discounted game.

Keywords: Switching Costs; Repeated Games; Folk Theorem; Stochastic Games; Non-Zero-sum games (search for similar items in EconPapers)
Date: 2022-12-07
New Economics Papers: this item is included in nep-gth and nep-mic
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