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Folk Theorems in Repeated Games with Switching Costs

Author

Listed:
  • Yevgeny Tsodikovich

    (Bar-Ilan University [Israël])

  • Xavier Venel

    (LUISS - Libera Università Internazionale degli Studi Sociali Guido Carli [Roma])

  • Anna Zseleva

    (Maastricht University [Maastricht])

Abstract

We study how switching costs affect the sub-game perfect equilibria in repeated games. We show that (i) the Folk Theorem holds whenever the players are patient enough; (ii) the set of equilibrium payoffs is obtained by considering the payoffs of a simple one-shot auxiliary game; and (iii) the switching costs have a negative impact on a player in the infinitely undiscounted repeated game but can be beneficial for him in a finitely repeated game or in a discounted game.

Suggested Citation

  • Yevgeny Tsodikovich & Xavier Venel & Anna Zseleva, 2022. "Folk Theorems in Repeated Games with Switching Costs," Working Papers hal-03888188, HAL.
    • Handle: RePEc:hal:wpaper:hal-03888188
    Note: View the original document on HAL open archive server: https://hal.science/hal-03888188
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    References listed on IDEAS

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    Keywords

    Switching Costs; Repeated Games; Folk Theorem; Stochastic Games; Non-Zero-sum games;
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