Dismissals and quits in repeated games

Pablo Casas-Arce

doi:10.1007/s00199-008-0422-0

Dismissals and quits in repeated games

Pablo Casas-Arce

Research output: Contribution to journal › Article › peer-review

3 Scopus citations

Abstract

This paper studies repeated games, where player 1 can decide to let the opponent continue or replace her by a new player. We also allow for the possibility of player 2 quitting the game. When only layoffs can occur, a folk theorem for finite horizons obtains due to the threat that termination of the relationship imposes on player 2. However, quits limit this result to those cases in which the outside option for player 2 is small (lower than some Nash equilibrium payoff of the stage game).

Original language	English (US)
Pages (from-to)	67-80
Number of pages	14
Journal	Economic Theory
Volume	43
Issue number	1
DOIs	https://doi.org/10.1007/s00199-008-0422-0
State	Published - Apr 2010
Externally published	Yes

Keywords

Dismissal
Folk theorem
Quit
Repeated games

ASJC Scopus subject areas

Economics and Econometrics

Access to Document

10.1007/s00199-008-0422-0

Cite this

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title = "Dismissals and quits in repeated games",

abstract = "This paper studies repeated games, where player 1 can decide to let the opponent continue or replace her by a new player. We also allow for the possibility of player 2 quitting the game. When only layoffs can occur, a folk theorem for finite horizons obtains due to the threat that termination of the relationship imposes on player 2. However, quits limit this result to those cases in which the outside option for player 2 is small (lower than some Nash equilibrium payoff of the stage game).",

keywords = "Dismissal, Folk theorem, Quit, Repeated games",

author = "Pablo Casas-Arce",

note = "Funding Information: P. Casas-Arce is grateful to Drew Fudenberg, Jerry Green, Oliver Hart, Paul Klemperer, Jim Malcomson, Andreu Mas-Colell, Meg Meyer, Adam Szeidl, seminar participants at Harvard University, three referees and an associate editor for very helpful comments. He also acknowledges the support of Banco de Espa{\~n}a, Ministerio de Ciencia y Tecnolog{\'i}a (SEJ2007-64340), and the Barcelona Economics Program of CREA.",

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N2 - This paper studies repeated games, where player 1 can decide to let the opponent continue or replace her by a new player. We also allow for the possibility of player 2 quitting the game. When only layoffs can occur, a folk theorem for finite horizons obtains due to the threat that termination of the relationship imposes on player 2. However, quits limit this result to those cases in which the outside option for player 2 is small (lower than some Nash equilibrium payoff of the stage game).

AB - This paper studies repeated games, where player 1 can decide to let the opponent continue or replace her by a new player. We also allow for the possibility of player 2 quitting the game. When only layoffs can occur, a folk theorem for finite horizons obtains due to the threat that termination of the relationship imposes on player 2. However, quits limit this result to those cases in which the outside option for player 2 is small (lower than some Nash equilibrium payoff of the stage game).

KW - Dismissal

KW - Folk theorem

KW - Quit

KW - Repeated games

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Dismissals and quits in repeated games

Abstract

Keywords

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