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A New Folk Theorem in OLG Games

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  • Chihiro Morooka

    (School of Science and Engineering, Tokyo Denki University)

Abstract

We study payoffs in the subgame perfect equilibria of general n-player discounted overlapping generations games. Without a public randomization device and the observability of mixed actions, we show that patient players can approximately obtain any payoffs in the smallest cube containing the feasible and individually rational one-shot payoffs in the sense of effective minimax values with pure actions. This result is obtained when we first choose the discount rate and then choose the players’ lifespan. When mixed actions are observable, the analogous result holds true for mixed minimaxing. We also show that players cannot obtain better payoffs outside this cube defined by mixed minimaxing.

Suggested Citation

  • Chihiro Morooka, 2022. "A New Folk Theorem in OLG Games," CIRJE F-Series CIRJE-F-1203, CIRJE, Faculty of Economics, University of Tokyo.
    • Handle: RePEc:tky:fseres:2022cf1203
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    File URL: http://www.cirje.e.u-tokyo.ac.jp/research/dp/2022/2022cf1203.pdf
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    References listed on IDEAS

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    3. 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.
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