TY - JOUR
T1 - Renegotiation in repeated games with side-payments
AU - Baliga, Sandeep
AU - Evans, Robert
PY - 2000/11
Y1 - 2000/11
N2 - We consider repeated games with side-payments: players have an endowment of wealth in each period in which transfers can be made. We show that if endowments are large enough and the common discount factor high enough, then a strongly renegotiation-proof equilibrium (SRP) in the sense of Farrell and Maskin exists. As the discount factor goes to 1, the set of SRP payoffs converges to the set of efficient, individually rational payoffs. These results provide a justification for the efficiency principle when agreements are not enforceable. Journal of Economic Literature Classification Numbers: C73, D23, L14.
AB - We consider repeated games with side-payments: players have an endowment of wealth in each period in which transfers can be made. We show that if endowments are large enough and the common discount factor high enough, then a strongly renegotiation-proof equilibrium (SRP) in the sense of Farrell and Maskin exists. As the discount factor goes to 1, the set of SRP payoffs converges to the set of efficient, individually rational payoffs. These results provide a justification for the efficiency principle when agreements are not enforceable. Journal of Economic Literature Classification Numbers: C73, D23, L14.
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U2 - 10.1006/game.1999.0769
DO - 10.1006/game.1999.0769
M3 - Article
AN - SCOPUS:0346487556
SN - 0899-8256
VL - 33
SP - 159
EP - 176
JO - Games and Economic Behavior
JF - Games and Economic Behavior
IS - 2
ER -