Discounted Stochastic Games with Voluntary Transfers
This paper studies discounted stochastic games perfect or imperfect public monitoring and the opportunity to conduct voluntary monetary transfers. We show that for all discount factors every public perfect equilibrium payoﬀ can be implemented with a simple class of equilibria that have a stationary structure on the equilibrium path and optimal penal codes with a stick and carrot structure. We develop algorithms that exactly compute or approximate the set of equilibrium payoﬀs and ﬁnd simple equilibria that implement these payoﬀs.
Kranz, Sebastian, "Discounted Stochastic Games with Voluntary Transfers" (2012). Cowles Foundation Discussion Papers. 2206.