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Subgame Perfect Equilibria in Continuous-Time Repeated Games

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  • Mitri Kitti

    (University of Turku)

Abstract

This paper considers subgame perfect equilibria of continuous-time repeated games with perfect monitoring when immediate reactions to deviations are allowed. The set of subgame perfect equilibrium payoffs is shown to be a fixed-point of a set-valued operator introduced in the paper. For a large class of discrete time games the closure of this set corresponds to the limit payoffs of when the discount factors converge to one. It is shown that in the continuous-time setup pure strategies are sufficient for obtaining all equilibrium payoffs supported by the players' minimax values. Moreover, the equilibrium payoff set is convex and satisfies monotone comparative statics when the ratios of players' discount rates increase.

Suggested Citation

  • Mitri Kitti, 2018. "Subgame Perfect Equilibria in Continuous-Time Repeated Games," Discussion Papers 120, Aboa Centre for Economics.
    • Handle: RePEc:tkk:dpaper:dp120
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    File URL: http://ace-economics.fi/kuvat/dp120.pdf
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    References listed on IDEAS

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    7. Kimmo Berg & Gijs Schoenmakers, 2017. "Construction of Subgame-Perfect Mixed-Strategy Equilibria in Repeated Games," Games, MDPI, vol. 8(4), pages 1-14, November.
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    Keywords

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    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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