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Inefficient stage Nash is not stable

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  • Norman, Thomas W.L.

Abstract

It is shown that, in infinitely-repeated games between two arbitrarily patient players, strategy profiles with inefficient pure stage-Nash continuations are not strategically stable (Kohlberg and Mertens, 1986). By contrast, a set of strategy profiles similar to the Prisoners' Dilemma's “perfect tit-for-tat” is “uniformly robust to perfect entrants” (Swinkels, 1992), and hence contains a strategically stable set. Moreover, this set satisfies iterated dominance and a version of forward induction, whilst its stable subset is admissible.

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  • Norman, Thomas W.L., 2018. "Inefficient stage Nash is not stable," Journal of Economic Theory, Elsevier, vol. 178(C), pages 275-293.
    • Handle: RePEc:eee:jetheo:v:178:y:2018:i:c:p:275-293
    DOI: 10.1016/j.jet.2018.09.009
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    More about this item

    Keywords

    Repeated games; Strategic stability; Evolutionary stability;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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