Let Γ be a game in extensive form and G be its reduced normal form game. Let Γ∞(δ) and G∞(δ) be the infinitely repeated game versions of Γ and G respectively, with common discount factor δ. This note points out that the set of SPE payoff vectors of Γ∞(δ) might be different from that of G∞(δ), even when δ is arbitrarily close to 1. This difference can be substantial when G fails to satisfy the dimensionality conditions of the repeated game literature. Journal of Economic Literature Classification Number: C72.
ASJC Scopus subject areas
- Economics and Econometrics