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Subgame-perfect equilibrium in games with almost perfect information: dispensing with public randomization

Author

Listed:
  • Barelli, Paulo

    (Department of Economics, University of Rochester)

  • Duggan, John

    (Department of Political Science and Department of Economics, University of Rochester)

Abstract

Harris, Reny, and Robson (1995) add a public randomization device to dynamic games with almost perfect information to ensure existence of subgame perfect equilibria (SPE). We show that when Nature's moves are atomless in the original game, public randomization does not enlarge the set of SPE payoffs: any SPE obtained using public randomization can be ``de-correlated" to produce a payoff-equivalent SPE of the original game. As a corollary, we provide an alternative route to a result of He and Sun (2020) on existence of SPE without public randomization, which in turn yields equilibrium existence for stochastic games with weakly continuous state transitions.

Suggested Citation

  • Barelli, Paulo & Duggan, John, 2021. "Subgame-perfect equilibrium in games with almost perfect information: dispensing with public randomization," Theoretical Economics, Econometric Society, vol. 16(4), November.
    • Handle: RePEc:the:publsh:3243
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    More about this item

    Keywords

    Existence; subgame-perfect equilibrium; infinite-action games; stochastic games; public randomization;
    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

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