The folk theorem for dominance solutions (Q1293477)

The author considers repeated games with a discount factor for the payoff function. He shows that in a supergame with perturbed payoff, the set of dominance solution payoff vectors converges to the set of individually rational convex combinations of payoff vectors in the stage game, as the number of stages tends to infinity, and the perturbation of the payoff function tends to zero. A similar result is shown for discounted supergames, where in addition, the discount factor on the payoff function is required to converge to 1.