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On Repeated Games with Endogenous Matching Decision

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  • Heiner Schumacher

Abstract

We study infinitely repeated games that are played by many groups simultaneously and where players have the option to maintain or quit relationships. For two-player stage games any individually rational payoff vector in the relative interior of V* can be sustained as equilibrium payoff if the discount factor δ is sufficiently large. Such a statement is not possible for stage games with more than two players. We translate the refinement of weak renegotiation-proofness to our framework and characterize the set of payoffs that can be sustained through strategies that are ibilaterally rationalj in the sense of Ghosh and Ray (1996).

Suggested Citation

  • Heiner Schumacher, 2015. "On Repeated Games with Endogenous Matching Decision," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 171(3), pages 544-564, September.
  • Handle: RePEc:mhr:jinste:urn:sici:0932-4569(201509)171:3_544:orgwem_2.0.tx_2-d
    DOI: 10.1628/093245613X14302136524716
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    References listed on IDEAS

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    1. Andreoni, James & Samuelson, Larry, 2006. "Building rational cooperation," Journal of Economic Theory, Elsevier, vol. 127(1), pages 117-154, March.
    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. Pablo Casas-Arce, 2010. "Dismissals and quits in repeated games," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 43(1), pages 67-80, April.
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    More about this item

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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