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Renegotiation and Symmetry in Repeated Games

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Abstract

It seems reasonable to suppose that in repeated games in which communications is possible, play is determined through a process of negotiation and renegotiation as events unfold. In the absence of a satisfying theory of players' bargaining power, it is unclear how to model this process. Symmetric repeated games are an important class in which the problem is less troublesome. Whatever its source, bargaining power is presumably the same for all players in a symmetric game. We take equal bargaining power to mean that a player can mount a credible objection to a continuation equilibrium in which he receives a particular expected present discounted value, if there are other self enforcing agreements that never give any player such a low continuation value after any history. This is formalized in a solution concept called consistent bargaining equilibrium.

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  • David G. Pearce & Dilip Abreu & Ennio Stacchetti, 1989. "Renegotiation and Symmetry in Repeated Games," Cowles Foundation Discussion Papers 920, Cowles Foundation for Research in Economics, Yale University.
  • Handle: RePEc:cwl:cwldpp:920
    Note: CFP 852.
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    1. Drew Fudenberg & David Levine & Eric Maskin, 2008. "The Folk Theorem With Imperfect Public Information," World Scientific Book Chapters, in: Drew Fudenberg & David K Levine (ed.), A Long-Run Collaboration On Long-Run Games, chapter 12, pages 231-273, World Scientific Publishing Co. Pte. Ltd..
    2. Farrell, Joseph & Maskin, Eric, 1989. "Renegotiation in repeated games," Games and Economic Behavior, Elsevier, vol. 1(4), pages 327-360, December.
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    Cited by:

    1. Nir, A., 2004. "Relationships as Commitment Devices : Strategic Silence," Discussion Paper 2004-49, Tilburg University, Center for Economic Research.
    2. David G. Pearce, 1991. "Repeated Games: Cooperation and Rationality," Cowles Foundation Discussion Papers 983, Cowles Foundation for Research in Economics, Yale University.
    3. Nir, A., 2004. "Relationships as Commitment Devices : Strategic Silence," Other publications TiSEM 073fb830-048b-435e-80d2-c, Tilburg University, School of Economics and Management.
    4. Carlos M. Asilis, 1992. "Unionization in a dynamic oligopolistic model of international trade," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 7(2), pages 181-208.

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