Transcription of Chapter 12 Repeated Games - MIT OpenCourseWare
{{id}} {{{paragraph}}}
Example: stock market
Chapter 12 Repeated Games - MIT OpenCourseWare
Chapter 12 Repeated Games In real life, most Games are played within a larger context, and actions in a given situation affect not only the present situation but also the future situations that may arise. When a player acts in a given situation, he takes into account not only the implications of his actions for the current situation but also their implications for the future. If the players arepatient and the current actionshavesignificant implications for the future, then the considerations about the future may take over. This may lead to a rich set of behavior that may seem to be irrational when one considers the current situation alone. Such ideas are captured in the Repeated Games , in which a "stage game" is played repeatedly. The stage game is Repeated regardless of what has been played in the previous Games . This Chapter explores the basic ideas in the theory of Repeated Games and applies them in a variety of economic problems.
from the second day to each payoff in the stage game. Again, adding a constant to a player’s payoffs does not change the game, and hence the reduced game possesses the subgame-perfect equilibrium of the stage game as its unique subgame perfect equilibrium. Therefore, the unique subgame perfect equilibrium is as depicted below.
Loading..
Tags:
Information
Domain:
Source:
Link to this page:
Please notify us if you found a problem with this document: