Equilibrium and perfection in discounted supergames (Q1090635)

We discuss equilibrium and perfect equilibrium in a simplified model of the supergame. We assume that players can observe the mixed moves employed by all players at each previous stage. For this model, we obtain a complete characterization of the set of equilibrium outcomes, and a fairly weak sufficient condition for this set to coincide with the set of perfect equilibrium outcomes. Inter alia, simple proofs of the Folk Theorem and the result that the requirement of perfection does not eliminate any equilibrium outcomes for the undiscounted supergame are presented.