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Repeated games with present-biased preferences

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  • Chade, Hector
  • Prokopovych, Pavlo
  • Smith, Lones

Abstract

We study infinitely repeated games with perfect monitoring, where players have [beta]-[delta] preferences. We compute the continuation payoff set using recursive techniques and then characterize equilibrium payoffs. We then explore the cost of the present-time bias, producing comparative statics. Unless the minimax outcome is a Nash equilibrium of the stage game, the equilibrium payoff set is not monotonic in [beta] or [delta]. Finally, we show how the equilibrium payoff set is contained in that of a repeated game with smaller discount factor.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 139 (2008)
Issue (Month): 1 (March)
Pages: 157-175

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Handle: RePEc:eee:jetheo:v:139:y:2008:i:1:p:157-175

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Web page: http://www.elsevier.com/locate/inca/622869

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  1. Abreu, Dilip & Pearce, David & Stacchetti, Ennio, 1990. "Toward a Theory of Discounted Repeated Games with Imperfect Monitoring," Econometrica, Econometric Society, vol. 58(5), pages 1041-63, September.
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Cited by:
  1. Yılmaz, Murat, 2013. "Repeated moral hazard with a time-inconsistent agent," Journal of Economic Behavior & Organization, Elsevier, vol. 95(C), pages 70-89.
  2. Akin, Zafer, 2009. "Imperfect information processing in sequential bargaining games with present biased preferences," Journal of Economic Psychology, Elsevier, vol. 30(4), pages 642-650, August.
  3. John Duffy & Félix Muñoz-García, 2012. "Patience or Fairness? Analyzing Social Preferences in Repeated Games," Games, MDPI, Open Access Journal, vol. 3(1), pages 56-77, March.
  4. Doraszelski, Ulrich & Escobar, Juan F., 2012. "Restricted feedback in long term relationships," Journal of Economic Theory, Elsevier, vol. 147(1), pages 142-161.
  5. Bernergård, Axel, 2011. "Folk Theorems for Present-Biased Players," Working Paper Series in Economics and Finance 736, Stockholm School of Economics.
  6. Haan, Marco & Hauck, Dominic, 2014. "Games With Possibly Naive Hyperbolic Discounters," MPRA Paper 57960, University Library of Munich, Germany.

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