Two Papers on Repeated Games

Original article (link) posted: 31/10/2005

Sorin (1986) “On Repeated Games with Complete Information” Math. Of Operations Research, 11-1

Several properties of the sets of feasible payoffs for repeated games are shown. Particularly, the condition that the set of feasible payoffs are convex hull of the feasible payoffs in pure strategies is given. Namely, it is necessary and sufficient that a discount factor is larger than or equal to 1-1/N, where N is the number of the players.

Dal-Bo (2001) “Tacit Collusion under Interest Rate Fluctuations” Job Market Paper, UCLA

The paper examines the optimal tacit collusion equilibrium when the discount factor changes over time. It is shown that collusive prices and profits depend not only on the level of the discount factor but also on its volatility; they increase with a higher discount factor level and decrease with its volatility. The model is a variant of Rotemberg-Saloner model, where, instead of demand fluctuation, the discount factor is assumed to fluctuate.