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Recurring Bullies

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  • Matthew Jackson
  • Ehud Kalai

Abstract

In a recurring game, a stage game is played consecutively by different groups of players, with each group receiving information about the play of earlier groups. Starting with uncertainty about the distribution of types in the population, late groups may learn to play a correct Bayesian equilibrium, as if they know the type distribution. This paper concentrates on Selten's Chain Store game and the Kreps, Milgrom, Roberts, Wilson phenomenon, where a small perceived inaccuracy about the type distribution can drastically alter the equilibrium behavior. It presents sufficient conditions that prevent this phenomenon from persisting in a recurring setting.

Suggested Citation

  • Matthew Jackson & Ehud Kalai, 1995. "Recurring Bullies," Discussion Papers 1151, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  • Handle: RePEc:nwu:cmsems:1151
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    References listed on IDEAS

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    1. Fudenberg, Drew & Levine, David K, 1993. "Steady State Learning and Nash Equilibrium," Econometrica, Econometric Society, pages 547-573.
    2. Jackson, Matthew O. & Kalai, Ehud, 1997. "Social Learning in Recurring Games," Games and Economic Behavior, Elsevier, vol. 21(1-2), pages 102-134, October.
    3. Spiegel, Mark M., 1995. "Threshold effects in international lending," Journal of Development Economics, Elsevier, vol. 46(2), pages 341-356, April.
    4. Jordan, J. S., 1991. "Bayesian learning in normal form games," Games and Economic Behavior, Elsevier, vol. 3(1), pages 60-81, February.
    5. Lehrer, Ehud & Smorodinsky, Rann, 1997. "Repeated Large Games with Incomplete Information," Games and Economic Behavior, Elsevier, vol. 18(1), pages 116-134, January.
    6. Kreps, David M. & Wilson, Robert, 1982. "Reputation and imperfect information," Journal of Economic Theory, Elsevier, pages 253-279.
    7. Kalai, Ehud & Lehrer, Ehud, 1993. "Rational Learning Leads to Nash Equilibrium," Econometrica, Econometric Society, pages 1019-1045.
    8. Aumann, Robert J. & Heifetz, Aviad, 2002. "Incomplete information," Handbook of Game Theory with Economic Applications,in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 3, chapter 43, pages 1665-1686 Elsevier.
    9. Milgrom, Paul & Roberts, John, 1982. "Predation, reputation, and entry deterrence," Journal of Economic Theory, Elsevier, pages 280-312.
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    Cited by:

    1. Matthew O. Jackson & Ehud Kalai, 1997. "False Reputation in a Society of Players," Discussion Papers 1184R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.

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