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A Foundation for Markov Equilibria in Sequential Games with Finite Social Memory -super-

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  • V. Bhaskar
  • George J. Mailath
  • Stephen Morris

Abstract

We study stochastic games with an infinite horizon and sequential moves played by an arbitrary number of players. We assume that social memory is finite--every player, except possibly one, is finitely lived and cannot observe events that are sufficiently far back in the past. This class of games includes games between a long-run player and a sequence of short-run players, and games with overlapping generations of players. An equilibrium is purifiable if some close-by behaviour is consistent with equilibrium when agents' payoffs in each period are perturbed additively and independently. We show that only Markov equilibria are purifiable when social memory is finite. Thus if a game has at most one long-run player, all purifiable equilibria are Markov. Copyright 2013, Oxford University Press.

Suggested Citation

  • V. Bhaskar & George J. Mailath & Stephen Morris, 2013. "A Foundation for Markov Equilibria in Sequential Games with Finite Social Memory -super-," Review of Economic Studies, Oxford University Press, vol. 80(3), pages 925-948.
  • Handle: RePEc:oup:restud:v:80:y:2013:i:3:p:925-948
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    File URL: http://hdl.handle.net/10.1093/restud/rds047
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    Cited by:

    1. repec:eee:gamebe:v:109:y:2018:i:c:p:382-400 is not listed on IDEAS
    2. Attila Ambrus & Shih En Lu, 2015. "A Continuous-Time Model of Multilateral Bargaining," American Economic Journal: Microeconomics, American Economic Association, vol. 7(1), pages 208-249, February.
    3. Elliott, Matt & Nava, Francesco, 2019. "Decentralized bargaining in matching markets: efficient stationary equilibria and the core," LSE Research Online Documents on Economics 87219, London School of Economics and Political Science, LSE Library.
    4. repec:eee:gamebe:v:103:y:2017:i:c:p:185-198 is not listed on IDEAS
    5. P. Jean-Jacques Herings & Harold Houba, 2016. "The Condorcet paradox revisited," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 47(1), pages 141-186, June.
    6. Wioletta Dziuda & Antoine Loeper, 2016. "Dynamic Collective Choice with Endogenous Status Quo," Journal of Political Economy, University of Chicago Press, vol. 124(4), pages 1148-1186.
    7. Morris, Stephen, 2014. "Coordination, timing and common knowledge," Research in Economics, Elsevier, vol. 68(4), pages 306-314.
    8. Heller, Yuval & Mohlin, Erik, 2015. "Unique Stationary Behavior," MPRA Paper 66179, University Library of Munich, Germany.
    9. repec:bla:ecinqu:v:56:y:2018:i:1:p:138-157 is not listed on IDEAS

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