On the feasible payoff set of two‐player repeated games with unequal discounting

On the feasible payoff set of two‐player repeated games with unequal discounting

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Article ID: iaor20131250
Volume: 42
Issue: 1
Start Page Number: 295
End Page Number: 303
Publication Date: Feb 2013
Journal: International Journal of Game Theory
Authors: ,
Keywords: Pareto front
Abstract:

We provide a novel characterization of the feasible payoff set of a general two‐player repeated game with unequal discounting. In particular, we show that generically the Pareto frontier shifts outwards and the feasible payoff set expands in the sense of set inclusion, as the time horizon increases. This result reinforces and refines the insight in Lehrer and Pauzner (1999) by showing that a longer horizon enables the players to conduct intertemporal trade in a more flexible fashion.

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