Abstract
Consider repeated two-player games with perfect monitoring and discounting. We provide an algorithm that computes the set V* of payoff pairs of all pure-strategy subgame-perfect equilibria with public randomization. The algorithm provides significant efficiency gains over the existing implementations of the algorithm from Abreu et al. (1990). These efficiency gains arise from a better understanding of the manner in which extreme points of the equilibrium payoff set are generated. An important theoretical implication of our algorithm is that the set of extreme points E of V* is finite. Indeed, |E| 3|A|, where A is the set of action profiles of the stage game.
Original language | English (US) |
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Pages (from-to) | 313-338 |
Number of pages | 26 |
Journal | Theoretical Economics |
Volume | 9 |
Issue number | 2 |
DOIs | |
State | Published - May 2014 |
All Science Journal Classification (ASJC) codes
- General Economics, Econometrics and Finance
Keywords
- Computation
- Perfect monitoring
- Repeated games