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Subgame–Perfect Equilibria of Finite– and Infinite–Horizon Games

In: A Long-Run Collaboration On Long-Run Games

Author

Listed:
  • DREW FUDENBERG

    (Department of Economics, U. C. Berkeley, Berkeley, California 94720, USA)

  • DAVID LEVINE

    (Department of Economics, U.C.L.A., Los Angeles, California 90024, USA)

Abstract

AbstractWe show that subgame-perfect equilibria of infinite-horizon games arise as limits, as the horizon grows long and epsilon small, of subgame-perfect epsilon-equilibria of games which are truncated after a finite horizon. A number of applications show that this result provides a useful technique for analyzing the existence and uniqueness of infinite-horizon equilibria. We extend our result to the sequential equilibrium concept.

Suggested Citation

  • Drew Fudenberg & David Levine, 2008. "Subgame–Perfect Equilibria of Finite– and Infinite–Horizon Games," World Scientific Book Chapters,in: A Long-Run Collaboration On Long-Run Games, chapter 1, pages 3-20 World Scientific Publishing Co. Pte. Ltd..
  • Handle: RePEc:wsi:wschap:9789812818478_0001
    as

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    References listed on IDEAS

    as
    1. Kreps, David M & Wilson, Robert, 1982. "Sequential Equilibria," Econometrica, Econometric Society, vol. 50(4), pages 863-894, July.
    2. Fudenberg, Drew & Tirole, Jean, 1983. "Capital as a commitment: Strategic investment to deter mobility," Journal of Economic Theory, Elsevier, vol. 31(2), pages 227-250, December.
    3. Rubinstein, Ariel, 1979. "Equilibrium in supergames with the overtaking criterion," Journal of Economic Theory, Elsevier, vol. 21(1), pages 1-9, August.
    4. David Levine, 1982. "Enforcement of Collusion in Oligopoly," UCLA Economics Working Papers 247, UCLA Department of Economics.
    5. Drew Fudenberg & David Levine, 1981. "Perfect Equilibria of Finite and Infinite Horizon Games," UCLA Economics Working Papers 216, UCLA Department of Economics.
    6. Reinhard Selten, 1974. "Reexamination of the Perfectness Concept for Equilibrium Points in Extensive Games," Center for Mathematical Economics Working Papers 023, Center for Mathematical Economics, Bielefeld University.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Long-Run Players; Limit Games; Robustness; Equilibrium; Reputation Effects; Repeated Games;

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General

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