Construction of subgame-perfect mixed-strategy equilibria in repeated games

Kimmo Berg*, Gijs Schoenmakers

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

3 Citations (Scopus)
84 Downloads (Pure)

Abstract

This paper examines how to construct subgame-perfect mixed-strategy equilibria in discounted repeated games with perfect monitoring. We introduce a relatively simple class of strategy profiles that are easy to compute and may give rise to a large set of equilibrium payoffs. These sets are called self-supporting sets, since the set itself provides the continuation payoffs that are required to support the equilibrium strategies. Moreover, the corresponding strategies are simple as the players face the same augmented game on each round but they play different mixed actions after each realized pure-action profile. We find that certain payoffs can be obtained in equilibrium with much lower discount factor values compared to pure strategies. The theory and the concepts are illustrated in 2 × 2 games.

Original languageEnglish
Article number47
Pages (from-to)1-14
JournalGames
Volume8
Issue number4
DOIs
Publication statusPublished - 1 Dec 2017
MoE publication typeA1 Journal article-refereed

Keywords

  • Mixed strategy
  • Payoff set
  • Repeated game
  • Subgame perfection

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