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Stable Agreements in Infinitely Repeated Games

Author

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  • Licun Xue

    () (Department of Economics, University of Aarhus, Denmark)

Abstract

This paper studies infinitely repeated games where players can form coalitions to coordinate their actions via self-enforcing agreements. The proposed notion of "stable agreements" extends a characterization of the set of subgame perfect equilibrium paths by Greenberg (1989, 1990) to account for self-enforcing coalitional deviations. An agreement is stable if no coalition can deviate in such a way that by solely coordinating the actions of its own members, it guarantees a higher payoff for each member. Existence of the proposed notion is established and its relation to other notions is investigated.

Suggested Citation

  • Licun Xue, "undated". "Stable Agreements in Infinitely Repeated Games," Economics Working Papers 2000-13, Department of Economics and Business Economics, Aarhus University.
  • Handle: RePEc:aah:aarhec:2000-13
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    File URL: ftp://ftp.econ.au.dk/afn/wp/00/wp00_13.pdf
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    References listed on IDEAS

    as
    1. Bergin James & MacLeod W. Bentley, 1993. "Efficiency and Renegotiation in Repeated Games," Journal of Economic Theory, Elsevier, vol. 61(1), pages 42-73, October.
    2. Douglas Bernheim, B. & Ray, Debraj, 1989. "Collective dynamic consistency in repeated games," Games and Economic Behavior, Elsevier, vol. 1(4), pages 295-326, December.
    3. Abreu, Dilip, 1988. "On the Theory of Infinitely Repeated Games with Discounting," Econometrica, Econometric Society, vol. 56(2), pages 383-396, March.
    4. Asheim, G.B., 1988. "Renegotiation-Proofness In Finite And Infinite Stage Games Through The Theory Of Social Situations," Papers 04-88, Norwegian School of Economics and Business Administration-.
    5. David G. Pearce, 1987. "Renegotiation-Proof Equilibria: Collective Rationality and Intertemporal Cooperation," Cowles Foundation Discussion Papers 855, Cowles Foundation for Research in Economics, Yale University.
    6. Bernheim, B. Douglas & Peleg, Bezalel & Whinston, Michael D., 1987. "Coalition-Proof Nash Equilibria I. Concepts," Journal of Economic Theory, Elsevier, vol. 42(1), pages 1-12, June.
    7. Greenberg, Joseph, 1989. "An application of the theory of social situations to repeated games," Journal of Economic Theory, Elsevier, vol. 49(2), pages 278-293, December.
    8. Fudenberg, Drew & Maskin, Eric, 1986. "The Folk Theorem in Repeated Games with Discounting or with Incomplete Information," Econometrica, Econometric Society, vol. 54(3), pages 533-554, May.
    9. Asheim, Geir B., 1991. "Extending renegotiation-proofness to infinite horizon games," Games and Economic Behavior, Elsevier, pages 278-294.
    10. Farrell, Joseph & Maskin, Eric, 1989. "Renegotiation in repeated games," Games and Economic Behavior, Elsevier, vol. 1(4), pages 327-360, December.
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    Citations

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    Cited by:

    1. Xiao Luo, 2009. "On the foundation of stability," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 40(2), pages 185-201, August.
    2. Boriss Siliverstovs, 2005. "The Bi-parameter Smooth Transition Autoregressive model," Economics Bulletin, AccessEcon, pages 1-11.
    3. Effrosyni Diamantoudi, 2003. "Equilibrium binding agreements under diverse behavioral assumptions," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), pages 431-446.
    4. Bo Sandemann Rasmussen, "undated". "Government Debt and Capital Accumulation in the Blanchard-Cass-Yaari OLG Model," Economics Working Papers 2000-14, Department of Economics and Business Economics, Aarhus University.
    5. Nikolaj Malchow-Moeller & Bo Jellesmark Thorsen, "undated". "Investment under Uncertainty - the Case of Repeated Investment Options," Economics Working Papers 2000-15, Department of Economics and Business Economics, Aarhus University.

    More about this item

    Keywords

    Repeated games; renegotiation; self-enforcing agreements; coalitions;

    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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