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Conventions and Coalitions in Repeated Games

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  • Liu, Ce

    (Michigan State University, Department of Economics)

  • Ali, S. Nageeb

    (Pennsylvania State University)

Abstract

We develop a theory of repeated interaction for coalitional behavior. We consider stage games where both individuals and coalitions may deviate. However, coalition members cannot commit to long-run behavior (on and off the path), and anticipate that today’s actions influence tomorrow’s behavior. We evaluate the degree to which history-dependence can ward off coalitional deviations. If monitoring is perfect, every feasible and strictly individually rational payoff can be supported by history-dependent conventions. By contrast, if players can make secret side-payments to each other, every coalition achieves a coalitional minmax value, reducing the set of supportable payoffs to the core of the stage game.

Suggested Citation

  • Liu, Ce & Ali, S. Nageeb, 2019. "Conventions and Coalitions in Repeated Games," Working Papers 2019-8, Michigan State University, Department of Economics.
    • Handle: RePEc:ris:msuecw:2019_008
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    More about this item

    Keywords

    cooperative games; core; repeated games; secrecy;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations

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