Critical discount factor values in discounted supergames

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dc.contributor Aalto-yliopisto fi
dc.contributor Aalto University en Berg, Kimmo Kärki, Markus 2018-08-01T12:37:59Z 2018-08-01T12:37:59Z 2018-07-10
dc.identifier.citation Berg , K & Kärki , M 2018 , ' Critical discount factor values in discounted supergames ' Games , vol 9 , no. 3 , 47 , pp. 1-17 . DOI: 10.3390/g9030047 en
dc.identifier.issn 2073-4336
dc.identifier.other PURE UUID: 0d9a72af-2fc0-46a1-95d5-d8860ff44fa4
dc.identifier.other PURE ITEMURL:
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dc.description.abstract This paper examines the subgame-perfect equilibria in symmetric 2 × 2 supergames. We solve the smallest discount factor value for which the players obtain all the feasible and individually rational payoffs as equilibrium payoffs. We show that the critical discount factor values are not that high in many games and they generally depend on how large the payoff set is compared to the set of feasible payoffs. We analyze how the stage-game payoffs affect the required level of patience and organize the games into groups based on similar behavior. We study how the different strategies affect the set of equilibria by comparing pure, mixed and correlated strategies. This helps us understand better how discounting affects the set of equilibria and we can identify the games where extreme patience is required and the type of payoffs that are difficult to obtain. We also observe discontinuities in the critical values, which means that small changes in the stage-game payoffs may affect dramatically the equilibrium payoffs. en
dc.format.extent 1-17
dc.format.mimetype application/pdf
dc.language.iso en en
dc.relation.ispartofseries Games en
dc.relation.ispartofseries Volume 9, issue 3 en
dc.rights openAccess en
dc.subject.other Statistics and Probability en
dc.subject.other Statistics, Probability and Uncertainty en
dc.subject.other Applied Mathematics en
dc.subject.other 112 Statistics and probability en
dc.subject.other 111 Mathematics en
dc.title Critical discount factor values in discounted supergames en
dc.type A1 Alkuperäisartikkeli tieteellisessä aikakauslehdessä fi
dc.description.version Peer reviewed en
dc.contributor.department Department of Mathematics and Systems Analysis
dc.contributor.department Aalto University
dc.subject.keyword 2×2 games
dc.subject.keyword Correlated equilibrium
dc.subject.keyword Discount factor
dc.subject.keyword Folk theorem
dc.subject.keyword Payoff set
dc.subject.keyword Repeated game
dc.subject.keyword Statistics and Probability
dc.subject.keyword Statistics, Probability and Uncertainty
dc.subject.keyword Applied Mathematics
dc.subject.keyword 112 Statistics and probability
dc.subject.keyword 111 Mathematics
dc.identifier.urn URN:NBN:fi:aalto-201808014072
dc.identifier.doi 10.3390/g9030047
dc.type.version publishedVersion

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