An algorithm for two-player repeated games with perfect monitoring

Dilip Abreu, Yuliy Sannikov

    Research output: Contribution to journalArticle

    Abstract

    Consider repeated two-player games with perfect monitoring and discounting. We provide an algorithm that computes the set V* of payoff pairs 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 et al. (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.

    Original languageEnglish (US)
    Pages (from-to)313-338
    Number of pages26
    JournalTheoretical Economics
    Volume9
    Issue number2
    DOIs
    StatePublished - May 2014

    Keywords

    • Computation
    • Perfect monitoring
    • Repeated games

    ASJC Scopus subject areas

    • Economics, Econometrics and Finance(all)

    Fingerprint Dive into the research topics of 'An algorithm for two-player repeated games with perfect monitoring'. Together they form a unique fingerprint.

  • Cite this