Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/233312 
Year of Publication: 
2014
Series/Report no.: 
Discussion paper No. 96
Publisher: 
Aboa Centre for Economics (ACE), Turku
Abstract: 
This paper characterizes the subgame-perfect pure-strategy equilibrium paths in discounted supergames with perfect monitoring. It is shown that all the equilibrium paths are composed of fragments called elementary subpaths. This characterization result is complemented with an algorithm for finding the elementary subpaths. By using these subpaths it is possible to generate equilibrium paths and payoffs. When there are finitely many elementary subpaths, all the equilibrium paths can be represented by a directed graph. These graphs can be used in analyzing the complexity of equilibrium outcomes. In particular, it is shown that the size and the density of the equilibrium set can be measured by the asymptotic growth rate of equilibrium paths and the Hausdorff dimension of the payoff set.
Subjects: 
repeated game
subgame-perfect equilibrium
equilibrium path
graph presentation of paths
complexity
JEL: 
C72
C73
Document Type: 
Working Paper

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