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A note on ”Necessary and sufficient conditions for the perfect finite horizon folk theorem” [Econometrica, 63 (2): 425-430, 1995.]

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  • Demeze-Jouatsa, Ghislain-Herman

    (Center for Mathematical Economics, Bielefeld University)

Abstract

Smith (1995) presented a necessary and sufficient condition for the finite- horizon perfect folk theorem. In the proof of this result, the author constructed a family of five-phase strategy profiles to approach feasible and individually rational payoff vec- tors of the stage-game. These strategy profiles are not subgame perfect Nash equilibria of the finitely repeated game. I illustrate this fact with a counter-example. However, the characterization of attainable payoff vectors by Smith remains true. I provide an alternative proof.

Suggested Citation

  • Demeze-Jouatsa, Ghislain-Herman, 2018. "A note on ”Necessary and sufficient conditions for the perfect finite horizon folk theorem” [Econometrica, 63 (2): 425-430, 1995.]," Center for Mathematical Economics Working Papers 583, Center for Mathematical Economics, Bielefeld University.
    • Handle: RePEc:bie:wpaper:583
    as

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    File URL: https://pub.uni-bielefeld.de/download/2930380/2930381
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    References listed on IDEAS

    as
    1. Drew Fudenberg & Eric Maskin, 2008. "The Folk Theorem In Repeated Games With Discounting Or With Incomplete Information," World Scientific Book Chapters, in: Drew Fudenberg & David K Levine (ed.), A Long-Run Collaboration On Long-Run Games, chapter 11, pages 209-230, World Scientific Publishing Co. Pte. Ltd..
    2. Abreu, Dilip & Dutta, Prajit K & Smith, Lones, 1994. "The Folk Theorem for Repeated Games: A NEU Condition," Econometrica, Econometric Society, vol. 62(4), pages 939-948, July.
    3. Smith, Lones, 1995. "Necessary and Sufficient Conditions for the Perfect Finite Horizon Folk Theorem," Econometrica, Econometric Society, vol. 63(2), pages 425-430, March.
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    Keywords

    Finitely Repeated Games; Subgame Perfect Nash Equilibrium; Folk Theorem; Discount Factor;
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