Efficiency and Renegotiation in Repeated Games
AbstractThis paper introduces a general framework for the discussion of renegotiation in repeated games, provides a new concept of "renegotiation proof" equilibrium, and shows how this model clarifies and unifies existing work in this area. The procedure involves restricting axiomatically the class of agreements which may be considered admissible, thus taking incentives into consideration at the beginning of the game when an agreement is selected. We define a preference ordering on agreements, so that given the set of agreements which satisfy the axioms imposed, we may select a "best" agreement. We use this framework to introduce a new concept of renegotiation proofness -- recursive efficiency -- and apply it to the efficiency wage model.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Economic Theory.
Volume (Year): 61 (1993)
Issue (Month): 1 (October)
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Web page: http://www.elsevier.com/locate/inca/622869
Other versions of this item:
- MacLeod, B.W. & Bergin, J., 1991. "Efficiency and Renegotiation in Repeated Games," Cahiers de recherche 9118, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
- James Bergin & Bentley MacLeod, 1989. "Efficiency and Renegotiation in Repeated Games," Working Papers 752, Queen's University, Department of Economics.
- MacLeod, B.W. & Bergin, J., 1991. "Efficiency and Renegotiation in Repeated Games," Cahiers de recherche 9118, Universite de Montreal, Departement de sciences economiques.
- Bergin, J. & Macleod, B., 1989. "Eficiency And Renegotiation In Repeated Games," UFAE and IAE Working Papers 121-89, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
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