Abstract
We consider the infinitely-repeated prisoners' dilemma with lexicographic complexity costs, where transitional complexity between states is included as one aspect of overall strategic complexity. We prove that a full folk theorem obtains in presence of any level of perfection of the equilibrium strategy, if the players consider off-equilibrium path payoff prior to minimizing complexity.
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This work was partially done while the author was visiting at Department of Managerial Economics and Decision Sciences, Kellogg Graduate School of Management, Northwestern University, Evanston, Illinois 60208, USA.
The author gratefully acknowledges the support from CONICET: Consejo de Investigaciones Cientificas y Técnicas, República Argentina. Thanks are given to Ehud Kalai, Alejandro Manelli and anonymous referees of this journal for many helpful discussions and comments. All errors are the author's.
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Neme, A. Little perfection and complexity. Int J Game Theory 22, 309–318 (1993). https://doi.org/10.1007/BF01240128
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DOI: https://doi.org/10.1007/BF01240128