Strongly Symmetric Subgame Perfect Equilibria in Infinitely Repeated Games with Perfect Monitoring and Discounting

Cronshaw, Mark B.; Luenberger, David G.

doi:10.1006/game.1994.1012

Cited by 41 publications

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“…15 In the U.S. credit card lending market potential rival banks are identifiable because credit card lending is highly concentrated and this concentration has been persistent. The Federal Reserve has collected data on credit card lending and related charge-offs since the first quarter of 1991 in the Call Reports.…”

Section: The Credit Card Loan Marketmentioning

confidence: 99%

Bank Credit Cycles

Gorton¹,

He²

2005

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Private information about prospective borrowers produced by a bank can affect rival lenders due to a "winner's curse" effect. Strategic interaction between banks with respect to the intensity of costly information production results in endogenous credit cycles, periodic "credit crunches."Empirical tests are constructed based on parameterizing public information about relative bank performance that is at the root of banks' beliefs about rival banks' behavior. Consistent with the theory, we find that the relative performance of rival banks has predictive power for subsequent lending in the credit card market, where we can identify the main competitors. At the macroeconomic level, we show that the relative bank performance of commercial and industrial loans is an autonomous source of macroeconomic fluctuations. We also find that the relative bank performance is a priced risk factor for both banks and nonfinancial firms. The factor-coefficients for non-financial firms are decreasing with size.

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Section: The Credit Card Loan Marketmentioning

confidence: 99%

Bank Credit Cycles

Gorton¹,

He²

2005

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“…We follow the recursive approach developed by APS and applied by Cronshaw and Luenberger(1990) to perfect information games. In the recursive formulation of the problem, each subgame perfect equilibrium payoff vector is supported by a profile of current actions consistent with Nash play in the current period and a vector of continuation payoffs that are themselves payoffs in some subgame perfect equilibrium.…”

Section: Assumptionmentioning

confidence: 99%

“…Abreu, Pearce and Stacchetti (APS) (1986,1990) developed set-valued techniques for solving repeated games with imperfect monitoring, showing that the set of sequential equilibrium payoffs is a fixed point of a monotone operator similar to the Bellman operator in dynamic programming. Cronshaw and Luenberger (1990) extend the APS analysis to games with perfect monitoring. More generally, the APS method can be applied to any problem reducible to finding the maximal fixed point of a monotone set-valued operator.…”

Section: Introductionmentioning

confidence: 99%

Computing Supergame Equilibria

Judd¹,

Yeltekin²,

Conklin³

2003

Econometrica

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Abstract.We present a general method for computing the set of supergame equilibria in infinitely repeated games with perfect monitoring and public randomization. We present a three-stage algorithm which constructs a convex set containing the set of equilibrium values, constructs another convex set contained in the set of equilibrium values, and produces strategies which support them. We explore the properties of this algorithm by applying it to familiar games. * Forthcoming in Econometrica. † This work was supported by NSF grant SES-9012128, SES-9309613, and SES-9708991. This paper is an extension and final version of Conklin and Judd (1993). We gratefully acknowledge the comments and suggestions of three anonymous referees.

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“…In repeated games, the set of subgame-perfect equilibria can be defined recursively: a strategy profile is an equilibrium if certain equilibrium payoffs are available as continuation payoffs, and these continuation payoffs may be generated by means of other equilibrium strategy profiles. This construction has been presented for pure strategies in Abreu et al [1,2], where they give a fixed-point characterization of the set of equilibrium payoffs (see also [3][4][5][6][7][8][9][10][11][12]). …”

Section: Introductionmentioning

confidence: 99%

Construction of Subgame-Perfect Mixed-Strategy Equilibria in Repeated Games

Berg

Schoenmakers

2017

Games

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This paper examines how to construct subgame-perfect mixed-strategy equilibria in discounted repeated games with perfect monitoring. We introduce a relatively simple class of strategy profiles that are easy to compute and may give rise to a large set of equilibrium payoffs. These sets are called self-supporting sets, since the set itself provides the continuation payoffs that are required to support the equilibrium strategies. Moreover, the corresponding strategies are simple as the players face the same augmented game on each round but they play different mixed actions after each realized pure-action profile. We find that certain payoffs can be obtained in equilibrium with much lower discount factor values compared to pure strategies. The theory and the concepts are illustrated in 2 × 2 games.

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Strongly Symmetric Subgame Perfect Equilibria in Infinitely Repeated Games with Perfect Monitoring and Discounting

Cited by 41 publications

References 0 publications

Bank Credit Cycles

Bank Credit Cycles

Computing Supergame Equilibria

Construction of Subgame-Perfect Mixed-Strategy Equilibria in Repeated Games

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