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An Algorithm for Two Player Repeated Games with Perfect Monitoring

Author

Listed:
  • Dilip Abreu

    (Princeton University)

  • Yuliy Sannikov

    (Princeton University)

Abstract

Consider repeated two-player games with perfect information and discounting. We provide an algorithm that computes the set of payoff pairs V ? of all pure strategy subgame perfect equilibria with public randomization. The algorithm provides significant efficiency gains over the existing implementations of the algorithm from Abreu, Pearce and Stacchetti (1990). These efficiency gains arise from a better understanding of the manner in which extreme points of the equilibrium payoff set are generated. An important theoretical implication of our algorithm is that the set of extreme points E of V ? is finite. Indeed, |E| ? 3|A|, where A is the set of action profiles of the stage game.

Suggested Citation

  • Dilip Abreu & Yuliy Sannikov, 2011. "An Algorithm for Two Player Repeated Games with Perfect Monitoring," Working Papers 1360, Princeton University, Department of Economics, Econometric Research Program..
    • Handle: RePEc:pri:metric:wp026_2011_abreu_sannikov.pdf
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    Cited by:

    1. Johannes H�rner & Satoru Takahashi & Nicolas Vieille, 2012. "On the Limit Equilibrium Payoff Set in Repeated and Stochastic Games," Working Papers 1397, Princeton University, Department of Economics, Econometric Research Program..
    2. Du, Chuang, 2012. "Solving payoff sets of perfect public equilibria: an example," MPRA Paper 38622, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General

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