Transcription of Chapter 12 Repeated Games - MIT OpenCourseWare
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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. As it turns out, it is important whether the game is Repeated finitely or infinitely many times.
the unique Nash equilibrium at each of these subgames. Therefore, the actions in the last round are independent of what is played in the initial round. Hence, the players will ignore the future and play the game as if there is. no future game, each playing . Indeed, given the behavior in the last round, the game ...
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