In this chapter, we will study extensive form games where a strategic form game (the stage game) is repeatedly played for a finite or infinite number of periods. A well-known real-life example is the repeated strategic interaction of firms competing in an oligopoly. After formally defining finitely, and infinitely, repeated games, we will show that whether and why the repetition of a strategic form game may have subgame-perfect Nash equilibria that cannot be obtained by repeatedly playing the Nash equilibria of that strategic form game. We will also state and prove a result that characterizes the set of expected payoffs in a strategic form game that can be obtained as the limit average payoff of some subgame-perfect Nash equilibrium of the infinite repetition of that game.

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Repeated Games

  • Ismail Saglam

摘要

In this chapter, we will study extensive form games where a strategic form game (the stage game) is repeatedly played for a finite or infinite number of periods. A well-known real-life example is the repeated strategic interaction of firms competing in an oligopoly. After formally defining finitely, and infinitely, repeated games, we will show that whether and why the repetition of a strategic form game may have subgame-perfect Nash equilibria that cannot be obtained by repeatedly playing the Nash equilibria of that strategic form game. We will also state and prove a result that characterizes the set of expected payoffs in a strategic form game that can be obtained as the limit average payoff of some subgame-perfect Nash equilibrium of the infinite repetition of that game.