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Contemporaneous Perfect Epsilon-Equilibria

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  • George Mailath

    ()
    (Department of Economics, University of Pennsylvania)

  • Andrew Postlewaite

    ()
    (Department of Economics, University of Pennsylvania)

  • Larry Samuelson

    ()
    (Department of Economics, University of Wisconsin-Madison)

Abstract

We examine contemporaneous perfect epsilon-equilibria, in which a player’s actions after every history, evaluated at the point of deviation from the equilibrium, must be within epsilon of a best response. This concept implies, but is stronger than, Radner’s ex ante perfect epsilon-equilibrium. A strategy profile is a contemporaneous perfect epsilon-equilibrium of a game if it is a subgame perfect equilibrium in a perturbed game with nearly the same payoffs, with the converse holding for pure equilibria.

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Bibliographic Info

Paper provided by Penn Institute for Economic Research, Department of Economics, University of Pennsylvania in its series PIER Working Paper Archive with number 03-021.

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Length: 17 pages
Date of creation: 15 Aug 2003
Date of revision:
Handle: RePEc:pen:papers:03-021

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Keywords: Epsilon equilibrium; ex ante payoff; multistage game; subgame perfect equilibrium;

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  1. Ariel Rubinstein, 2010. "Perfect Equilibrium in a Bargaining Model," Levine's Working Paper Archive 661465000000000387, David K. Levine.
  2. E. Kohlberg & J.-F. Mertens, 1998. "On the Strategic Stability of Equilibria," Levine's Working Paper Archive 445, David K. Levine.
  3. Ehud Lehrer & Sylvain Sorin, 1998. "-Consistent equilibrium in repeated games," International Journal of Game Theory, Springer, Springer, vol. 27(2), pages 231-244.
  4. Drew Fudenberg & David K. Levine, 1983. "Subgame-Perfect Equilibria of Finite- and Infinite-Horizon Games," Levine's Working Paper Archive 219, David K. Levine.
  5. Drew Fudenberg & David K. Levine, 1986. "Limit Games and Limit Equilibria," Levine's Working Paper Archive 220, David K. Levine.
  6. Borgers, Tilman, 1989. "Perfect equilibrium histories of finite and infinite horizon games," Journal of Economic Theory, Elsevier, Elsevier, vol. 47(1), pages 218-227, February.
  7. Watson Joel, 1994. "Cooperation in the Infinitely Repeated Prisoners' Dilemma with Perturbations," Games and Economic Behavior, Elsevier, Elsevier, vol. 7(2), pages 260-285, September.
  8. Borgers, Tilman, 1991. "Upper hemicontinuity of the correspondence of subgame-perfect equilibrium outcomes," Journal of Mathematical Economics, Elsevier, vol. 20(1), pages 89-106.
  9. Radner, Roy, 1980. "Collusive behavior in noncooperative epsilon-equilibria of oligopolies with long but finite lives," Journal of Economic Theory, Elsevier, Elsevier, vol. 22(2), pages 136-154, April.
  10. Radner, Roy, 1981. "Monitoring Cooperative Agreements in a Repeated Principal-Agent Relationship," Econometrica, Econometric Society, Econometric Society, vol. 49(5), pages 1127-48, September.
  11. Drew Fudenberg & Jean Tirole, 1991. "Game Theory," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 0262061414, December.
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Cited by:
  1. Karl Schlag & Andriy Zapechelnyuk, 2009. "Decision Making in Uncertain and Changing Environments," Discussion Papers 19, Kyiv School of Economics.
  2. Felix Kubler & Karl Schmedders, 2003. "Approximate Versus Exact Equilibria," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 1382, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  3. Jackson, Matthew O. & Rodriguez-Barraquer, Tomas & Tan, Xu, 2012. "Epsilon-equilibria of perturbed games," Games and Economic Behavior, Elsevier, Elsevier, vol. 75(1), pages 198-216.
  4. Barlo, Mehmet & Carmona, Guilherme, 2007. "One - Memory in Repeated Games," FEUNL Working Paper Series wp500, Universidade Nova de Lisboa, Faculdade de Economia.

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