Balanquit, Romeo (2010): Equilibrium restoration in a class of tolerant strategies.
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This study shows that in a two-player infinitely repeated game where one is impatient, Pareto-superior subgame perfect equilibrium can still be achieved. An impatient player in this paper is depicted as someone who can truly destroy the possibility of attaining any feasible and individually rational outcome that is supported in equilibrium in repeated games, as asserted by the Folk Theorem. In this scenario, the main ingredient for the restoration of equilibrium is to introduce the notion of tolerant trigger strategy. Consequently, the use of the typical trigger strategy is abandoned since it ceases to be efficient as it only brings automatically the game to its punishment path, therefore eliminating the possibility of extracting other feasible equilibria. I provide a simple characterization of perfect equilibrium payoffs under this scenario and show that cooperative outcome can be approximated.
|Item Type:||MPRA Paper|
|Original Title:||Equilibrium restoration in a class of tolerant strategies|
|Keywords:||infinitely-repeated games; tolerant trigger strategy|
|Subjects:||C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C70 - General
C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C73 - Stochastic and Dynamic Games; Evolutionary Games; Repeated Games
|Depositing User:||Romeo Balanquit|
|Date Deposited:||07. Mar 2011 19:29|
|Last Modified:||20. Feb 2013 21:40|
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Tolerance, Cooperation, and Equilibrium Restoration in Repeated Games. (deposited 07. Apr 2010 09:49)
- Equilibrium restoration in a class of tolerant strategies. (deposited 07. Mar 2011 19:29) [Currently Displayed]