Title

An Algorithm for Two Player Repeated Games with Perfect Monitoring

Author(s)

Dilip Abreu Dilip Abreu (Princeton University)

Yuliy Sannikov Yuliy Sannikov (Princeton University)

Abstract

Consider repeated two-player games with perfect information and discounting. We provide an algorithm that computes the set of payoff pairs V ? 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, Pearce and Stacchetti (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.

Creation Date

2011-10

Section URL ID

ET

Paper Number

wp026_2011_Abreu_Sannikov.pdf

URL

http://detc.princeton.edu/wp-content/uploads/2016/11/wp026_2011_Abreu_Sannikov.pdf

File Function

Jel

C010, C700

Keyword(s)

Suppress

false

Series

10