The Castle on the Hill
A simple example of a stochastic games with irreversibility is studied and it is shown that the folk theorem fails in a robust way. In this game of Castle on the Hill, for a broad range of discount factors, including those close to me, equilibrium is unique. Moreover, the equilibrium for large discount factors is Pareto dominated by the equilibrium for low discount factors. A unique cyclic equilibrium is also possible for intermediate ranges of discount factors. (Copyright: Elsevier)
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Volume (Year): 3 (2000)
Issue (Month): 2 (April)
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References listed on IDEAS
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- Dutta, P.K., 1991. "A Folk Theorem for Stochastic Games," RCER Working Papers 293, University of Rochester - Center for Economic Research (RCER).
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- E. Maskin & D. Fudenberg, 1984. "The Folk Theorem and Repeated Games with Discount and with Incomplete Information," Working papers 310, Massachusetts Institute of Technology (MIT), Department of Economics.
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