Summary
Summary unit 7
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7.7 REPEATED GAMES~Games are
played 1 time.
~Overall payoffs:Epayoffs each
of time
~
If there's cooperation:Max overall payoff obtained
~ Ifs omeone defects cooperation:Punishment by the other player (despus de que el otro no juegue el cooperation, este
jugar la strategy que
beneficie menos al Malo).
~
How to find the SPNE?
SPE
-
outcome where NE was NOT played in Both cases
~ Ax twice
6 subgames in 1stperiod
~
By twice.
points:possibl Redpoints:NE played in both periods. (A, 2), (B,y)
Gamette they SPNE
form a
1. Busco de
NE la 1sttable
2. Miro que han de jugarpara obtain payoff:contingentstrategy:si desria:punishment
max uno se
strategy.
Hago 2nda tabla:cells:indicate in 2nd stage en base a 1st
3.
strategyplayed stage.
~
Checking deviations to see ifthe
strategy chosen is sub
game perfect:miro los payoffs que obtendrian al
deviating.
final if
If
theya re plan payoff:they won'tdeviate & SPE
ofthe repeated game
continuation strategies continuationpayoffs
(A,x)
S
(z)
REPEATED GAMES
by:GT, S (C, T,S)
~
Defined G:stage
came defined by:N, Ai, vi
=
T:n ofrepetitions G
of
v
1
=
a.V a
=
S:discountfactor (measures how much people t he
care about future).
1 -
8 1 -
8
to evaluate deviations
~
Grim triggerstrategy:players play the cooperative profile each period until someone deviates. From there they play the punishmentprofile forever.
Example:
to
play the cooperative profile always:
~
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