Renegotiation in repeated games with side-payments

Sandeep Baliga*, Robert Evans

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

9 Scopus citations

Abstract

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.

Original languageEnglish (US)
Pages (from-to)159-176
Number of pages18
JournalGames and Economic Behavior
Volume33
Issue number2
DOIs
StatePublished - Nov 2000

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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