On the folk theorem with one-dimensional payoffs and different discount factors

Guéron, Yves; Lamadon, Thibaut; Thomas, Caroline

doi:10.1016/j.geb.2010.12.009

Cited by 12 publications

(7 citation statements)

References 7 publications

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“…Consider the following three-player game (Fudenberg and Maskin 1986;Guéron et al 2011;Chen and Takahashi 2012):…”

Section: Unequal Discount Factorsmentioning

confidence: 99%

“…This is because the NEU condition is violated and the punishers have no incentive to punish the deviators as they simultaneously punish themselves. On the other hand, it was shown by Guéron et al (2011), Chen and Takahashi (2012) that the players can receive payoffs arbitrarily close to zero when the players have different discount factors. Now, let us try to find some equilibria in pure strategies with a payoff less than one, when the players have different time preferences.…”

Section: Unequal Discount Factorsmentioning

confidence: 99%

“…The recent work has focused on the case of unequal discount factors (Lehrer and Pauzner 1999;Salonen and Vartiainen 2008;Houba and Wen 2011;Guéron et al 2011;Chen and Takahashi 2012). Moreover, Gossner and Hörner (2010) examine the lowest equilibrium payoffs when the players cannot perfectly observe the opponents' actions.…”

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confidence: 99%

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Extremal Pure Strategies and Monotonicity in Repeated Games

Berg

2016

Comput Econ

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The recent development of computational methods in repeated games has made it possible to study the properties of subgame-perfect equilibria in more detail. This paper shows that the lowest equilibrium payoffs may increase in pure strategies when the players become more patient and this may cause the set of equilibrium paths to be non-monotonic. A numerical example is constructed such that a path is no longer equilibrium when the players' discount factors increase. This property can be more easily seen when the players have different time preferences, since in these games the punishment strategies may rely on the differences between the players' discount factors. A sufficient condition for the monotonicity of equilibrium paths is that the lowest equilibrium payoffs do not increase, i.e., the punishments should not become milder.

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“…Consider the following three-player game (Fudenberg and Maskin 1986;Guéron et al 2011;Chen and Takahashi 2012):…”

Section: Unequal Discount Factorsmentioning

confidence: 99%

Section: Unequal Discount Factorsmentioning

confidence: 99%

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Extremal Pure Strategies and Monotonicity in Repeated Games

Berg

2016

Comput Econ

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“…Therefore, it might be possible to attain the folk theorem without the stage-game full dimensionality. Guéron et al (2011) show the folk theorem for the specific example in Fudenberg and Maskin (1986) without the stage-game full dimensionality. Chen and Takahashi (2012) obtain a general folk theorem without stage-game full dimensionality.…”

Section: Assumption 1 (Pairwise Full Rank) For Each I J ∈ {1mentioning

confidence: 99%

Characterizing the limit set of perfect and public equilibrium payoffs with unequal discounting

Sugaya¹

2015

Theoretical Economics

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“…There are some recent developments in the theory of repeated games with unequal discounting. For the case of perfect monitoring, Chen () and Guéron, Lamadon, and Thomas () examine a folk theorem for a class of examples for which even a weak form of full dimensionality is violated. Further, Chen and Takahashi () prove a folk theorem for a class of games that satisfy a certain dynamic version of full dimensionality.…”

Section: Introductionmentioning

confidence: 99%

Collusion and heterogeneity of firms

Obara

Zincenko

2017

The RAND J of Economics

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We examine the impact of heterogeneous discounting on collusion in dynamic Bertrand competition. We show exactly when collusion can be sustained and how collusion would be organized efficiently with heterogeneous discounting. First, we show that collusion is possible if and only if the average discount factor exceeds a certain threshold, with or without capacity constraints. Next, we identify a dynamic pattern of market share that characterizes efficient collusion and obtain the unique long‐run prediction despite the presence of multiple equilibria. In the long run, the most patient firm and the most impatient firm tend to dominate the market.

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On the folk theorem with one-dimensional payoffs and different discount factors

Cited by 12 publications

References 7 publications

Extremal Pure Strategies and Monotonicity in Repeated Games

Extremal Pure Strategies and Monotonicity in Repeated Games

Characterizing the limit set of perfect and public equilibrium payoffs with unequal discounting

Collusion and heterogeneity of firms

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