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Inefficient stage Nash is not stable

Abstract:
It is shown that, in infinitely-repeated games between two arbitrarily patient players, strategy profiles with inefficient pure stage-Nash continuations are not strategically stable (Kohlberg and Mertens, 1986). By contrast, a set of strategy profiles similar to the Prisoners' Dilemma's “perfect tit-for-tat” is “uniformly robust to perfect entrants” (Swinkels, 1992), and hence contains a strategically stable set. Moreover, this set satisfies iterated dominance and a version of forward induction, whilst its stable subset is admissible.
Publication status:
Published
Peer review status:
Peer reviewed

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Publisher copy:
10.1016/j.jet.2018.09.009

Authors


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Institution:
University of Oxford
Department:
Economics
Oxford college:
Magdalen College
Role:
Author


Publisher:
Elsevier
Journal:
Journal of Economic Theory More from this journal
Volume:
178
Pages:
275-293
Publication date:
2018-09-27
Acceptance date:
2018-09-23
DOI:
ISSN:
0022-0531


Language:
English
Keywords:
Pubs id:
pubs:932013
UUID:
uuid:0a97506e-e932-4e3d-b272-df9b5cc5e2ff
Local pid:
pubs:932013
Source identifiers:
932013
Deposit date:
2018-10-25

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