Demons and repentance (Q1100103): Difference between revisions
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Property / cites work: Extremal equlibria of oligopolistic supergames / rank | |||
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Property / cites work: A Non-cooperative Equilibrium for Supergames / rank | |||
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Property / cites work: Noncooperative Collusion under Imperfect Price Information / rank | |||
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Property / cites work: Non-cooperative games / rank | |||
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Property / cites work: Games of perfect information, predatory pricing and the chain-store paradox / rank | |||
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Property / cites work: Reexamination of the perfectness concept for equilibrium points in extensive games / rank | |||
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Latest revision as of 16:32, 18 June 2024
scientific article
Language | Label | Description | Also known as |
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English | Demons and repentance |
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Demons and repentance (English)
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1988
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This paper presents a new explanation for the stability of cartels. For a large class of repeated Cournot duopoly games with discounting, strategies are constructed which have the property that cheating on the cartel is followed by repentance. It is shown that these repentance strategies are subgame perfect equilibrium strategies and that in the presence of demons (infrequently irrational behavior on the part of both players), they lead to Pareto superior expected discounted payoffs in comparison with either Friedman's trigger strategies or Abreu's ``stick and carrot'' strategies.
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stability of cartels
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repeated Cournot duopoly games
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discounting
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subgame perfect equilibrium strategies
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