Renegotiation-proof relational contracts
AbstractWe study infinitely repeated two-player games with perfect monitoring and assume that each period consists of two stages: one in which the players simultaneously choose an action and one in which they can transfer money to each other. In the first part of the paper, we derive simple conditions that allow a constructive characterization of all Pareto-optimal subgame perfect payoffs for all discount factors. In the second part, we examine different concepts of renegotiation-proofness and extend the characterization to renegotiation-proof payoffs.
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Bibliographic InfoArticle provided by Elsevier in its journal Games and Economic Behavior.
Volume (Year): 80 (2013)
Issue (Month): C ()
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Web page: http://www.elsevier.com/locate/inca/622836
Find related papers by JEL classification:
- C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
- L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
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