A Strong Anti-Folk Theorem

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Abstract

We study the properties of finitely complex, symmetric, globally stable, and semi-perfect equilibria. We show that: (1) If a strategy satisfies these properties then players play a Nash equilibrium of the stage game in every period; (2) The set of finitely complex, symmetric, globally stable, semi-perfect equilibrium payoffs in the repeated game equals the set of Nash equilibria payoffs in the stage game; and (3) A strategy vector satisfies these properties in a Pareto optimal way if and only if players play some Pareto optimal Nash equilibrium of the stage game in every stage. Our second main result is a strong anti-Folk Theorem, since, in contrast to what is described by the Folk Theorem, the set of equilibrium payoffs does not expand when the game is repeated.

Keywords

Nash equilibrium Complexity Stability Social institutions 

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Copyright information

© Springer Verlag 2006

Authors and Affiliations

  1. 1.Faculdade de Economia, Campus de CampolideUniversidade Nova de LisboaLisboaPortugal

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