Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/219180
Authors: 
Berg, Kimmo
Kärki, Markus
Year of Publication: 
2018
Citation: 
[Journal:] Games [ISSN:] 2073-4336 [Volume:] 9 [Year:] 2018 [Issue:] 3 [Pages:] 1-17
Abstract: 
This paper examines the subgame-perfect equilibria in symmetric 2×2 supergames. We solve the smallest discount factor value for which the players obtain all the feasible and individually rational payoffs as equilibrium payoffs. We show that the critical discount factor values are not that high in many games and they generally depend on how large the payoff set is compared to the set of feasible payoffs. We analyze how the stage-game payoffs affect the required level of patience and organize the games into groups based on similar behavior. We study how the different strategies affect the set of equilibria by comparing pure, mixed and correlated strategies. This helps us understand better how discounting affects the set of equilibria and we can identify the games where extreme patience is required and the type of payoffs that are difficult to obtain. We also observe discontinuities in the critical values, which means that small changes in the stage-game payoffs may affect dramatically the equilibrium payoffs.
Subjects: 
repeated game
folk theorem
discount factor
2x2 games
payoff set
correlated equilibrium
JEL: 
C73
Persistent Identifier of the first edition: 
Creative Commons License: 
https://creativecommons.org/licenses/by/4.0/
Document Type: 
Article
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