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Equilibrium behaviors in repeated games

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  • Li, Yingkai
  • Pei, Harry

Abstract

We examine a patient player's behavior when he can build reputations in front of a sequence of myopic opponents. With positive probability, the patient player is a commitment type who plays his Stackelberg action in every period. We characterize the patient player's action frequencies in equilibrium. Our results clarify the extent to which reputations can refine the patient player's behavior and provide new insights to entry deterrence, business transactions, and capital taxation. Our proof makes a methodological contribution by establishing a new concentration inequality.

Suggested Citation

  • Li, Yingkai & Pei, Harry, 2021. "Equilibrium behaviors in repeated games," Journal of Economic Theory, Elsevier, vol. 193(C).
    • Handle: RePEc:eee:jetheo:v:193:y:2021:i:c:s0022053121000399
    DOI: 10.1016/j.jet.2021.105222
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    References listed on IDEAS

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    Cited by:

    1. Harry Pei, 2022. "Reputation Effects under Short Memories," Papers 2207.02744, arXiv.org, revised Jan 2023.

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    More about this item

    Keywords

    Reputation; Action frequency; Behavior; Refinement; Concentration inequality;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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