Abstract
Consider repeated two-player games with perfect monitoring and discounting. We provide an algorithm that computes the set V* of payoff pairs of all pure-strategy subgame-perfect equilibria with public randomization. The algorithm provides significant efficiency gains over the existing implementations of the algorithm from Abreu et al. (1990). These efficiency gains arise from a better understanding of the manner in which extreme points of the equilibrium payoff set are generated. An important theoretical implication of our algorithm is that the set of extreme points E of V* is finite. Indeed, |E| 3|A|, where A is the set of action profiles of the stage game.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 313-338 |
| Number of pages | 26 |
| Journal | Theoretical Economics |
| Volume | 9 |
| Issue number | 2 |
| DOIs | |
| State | Published - 2014 |
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Keywords
- Computation
- Perfect monitoring
- Repeated games
ASJC Scopus subject areas
- Economics, Econometrics and Finance(all)
Cite this
An algorithm for two-player repeated games with perfect monitoring. / Abreu, Dilip; Sannikov, Yuliy.
In: Theoretical Economics, Vol. 9, No. 2, 2014, p. 313-338.Research output: Contribution to journal › Article
}
TY - JOUR
T1 - An algorithm for two-player repeated games with perfect monitoring
AU - Abreu, Dilip
AU - Sannikov, Yuliy
PY - 2014
Y1 - 2014
N2 - Consider repeated two-player games with perfect monitoring and discounting. We provide an algorithm that computes the set V* of payoff pairs of all pure-strategy subgame-perfect equilibria with public randomization. The algorithm provides significant efficiency gains over the existing implementations of the algorithm from Abreu et al. (1990). These efficiency gains arise from a better understanding of the manner in which extreme points of the equilibrium payoff set are generated. An important theoretical implication of our algorithm is that the set of extreme points E of V* is finite. Indeed, |E| 3|A|, where A is the set of action profiles of the stage game.
AB - Consider repeated two-player games with perfect monitoring and discounting. We provide an algorithm that computes the set V* of payoff pairs of all pure-strategy subgame-perfect equilibria with public randomization. The algorithm provides significant efficiency gains over the existing implementations of the algorithm from Abreu et al. (1990). These efficiency gains arise from a better understanding of the manner in which extreme points of the equilibrium payoff set are generated. An important theoretical implication of our algorithm is that the set of extreme points E of V* is finite. Indeed, |E| 3|A|, where A is the set of action profiles of the stage game.
KW - Computation
KW - Perfect monitoring
KW - Repeated games
UR - http://www.scopus.com/inward/record.url?scp=84896295533&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=84896295533&partnerID=8YFLogxK
U2 - 10.3982/TE1302
DO - 10.3982/TE1302
M3 - Article
VL - 9
SP - 313
EP - 338
JO - Theoretical Economics
JF - Theoretical Economics
SN - 1555-7561
IS - 2
ER -