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T-Space at The University of Toronto Libraries >
Theoretical Economics >
Volume 6, Number 1 (January 2011) >

Please use this identifier to cite or link to this item: http://hdl.handle.net/1807/27175

Title: Robustness to incomplete information in repeated games
Authors: Sylvain Chassang; Department of Economics, Princeton University
Satoru Takahashi; Department of Economics, Princeton University
Keywords: Robustness to incomplete information, one-shot robustness principle, repeated Prisoners' Dilemma, selective punishment, folk theorem
C72, C73, D82
Issue Date: 23-Jan-2011
Publisher: Theoretical Economics
Citation: Theoretical Economics; Vol 6, No 1 (2011)
Abstract: [This item is a preserved copy. To view the original, visit http://econtheory.org/] This paper extends the framework of Kajii and Morris (1997) to study the question of robustness to incomplete information in repeated games. We show that dynamically robust equilibria can be characterized using a one-shot robustness principle that extends the one-shot deviation principle. Using this result, we compute explicitly the set of dynamically robust equilibrium values in the repeated prisoners' dilemma. We show that robustness requirements have sharp intuitive implications regarding when cooperation can be sustained, what strategies are best suited to sustain cooperation, and how changes in payoffs affect the sustainability of cooperation. We also show that a folk theorem in dynamically robust equilibria holds, but requires stronger identifiability conditions than the pairwise full rank condition of Fudenberg, Levine and Maskin (1994).
URI: http://hdl.handle.net/1807/27175
Other Identifiers: http://econtheory.org/ojs/index.php/te/article/view/20110049
Rights: Authors who publish in <i>Theoretical Economics</i> will release their articles under the <a href="http://creativecommons.org/licenses/by-nc/2.5/">Creative Commons Attribution-NonCommercial license</a>. This license allows anyone to copy and distribute the article for non-commercial purposes provided that appropriate attribution is given.
Appears in Collections:Volume 6, Number 1 (January 2011)

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