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Instability of Belief-Free Equilibria

Heller, Yuval (2017): Instability of Belief-Free Equilibria. Forthcoming in: Journal of Economic Theory No. forthcoming

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Abstract

Various papers have presented folk-theorem results that yield efficiency in the repeated Prisoner's Dilemma with imperfect private monitoring. I present a mild refinement that requires robustness against small perturbations in the behavior of potential opponents, and I show that only defection satisfies this refinement among all the existing equilibria in the literature.

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