Abstract
We study infinitely repeated games with perfect monitoring, where players have β-δ preferences. We compute the continuation payoff set using recursive techniques and then characterize equilibrium payoffs. We then explore the cost of the present-time bias, producing comparative statics. Unless the minimax outcome is a Nash equilibrium of the stage game, the equilibrium payoff set is not monotonic in β or δ. Finally, we show how the equilibrium payoff set is contained in that of a repeated game with smaller discount factor.
Original language | English (US) |
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Pages (from-to) | 157-175 |
Number of pages | 19 |
Journal | Journal of Economic Theory |
Volume | 139 |
Issue number | 1 |
DOIs | |
State | Published - Mar 2008 |
Keywords
- Perfect monitoring
- Repeated games
- Strotz-Pollak equilibrium
- Subgame perfect equilibrium
- β-δ preferences
ASJC Scopus subject areas
- Economics and Econometrics