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On the Impossibility of Stability-Based Equilibria in Infinite Horizon: An Example

Author

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  • Malachy James Gavan
  • Alexander Frug

Abstract

This paper shows that stability-based equilibrium refinements may not be well defined when taken to the infinite horizon. To do so, we use a stable-set-style notion of the dynamically consistent partition, allowing for incomplete information. We provide a concrete example where, only via taking the game to the infinite horizon, the dynamically consistent partition of equilibria does not exist.

Suggested Citation

  • Malachy James Gavan & Alexander Frug, 2025. "On the Impossibility of Stability-Based Equilibria in Infinite Horizon: An Example," Working Papers 1536, Barcelona School of Economics.
    • Handle: RePEc:bge:wpaper:1536
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    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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