Document Type
Discussion Paper
Publication Date
12-1-2009
CFDP Number
1742
CFDP Revision Date
2010-08-01
CFDP Pages
46
Abstract
We present an algorithm to compute the set of perfect public equilibrium payoffs as the discount factor tends to one for stochastic games with observable states and public (but not necessarily perfect) monitoring when the limiting set of (long-run players’) equilibrium payoffs is independent of the state. This is the case, for instance, if the Markov chain induced by any Markov strategy profile is irreducible. We then provide conditions under which a folk theorem obtains: if in each state the joint distribution over the public signal and next period’s state satisfies some rank condition, every feasible payoff vector above the minmax payoff is sustained by a perfect public equilibrium with low discounting.
Recommended Citation
Hörner, Johannes; Sugaya, Takuo; Takahashi, Satoru; and Vieille, Nicolas, "Recursive Methods in Discounted Stochastic Games: An Algorithm for Delta Approaching 1 and a Folk Theorem" (2009). Cowles Foundation Discussion Papers. 2066.
https://elischolar.library.yale.edu/cowles-discussion-paper-series/2066