This paper develops a theory of repeated games for settings where coalitions may choose actions. We assume that members of coalitions cannot commit to long-run be- havior (on and o↵ the path) but coalitions can engage in short-term deviations. Players are farsighted and recognize that behavior is history-dependent. A convention reflects players’ shared understanding of how history influences future behavior. We say that a convention is stable if at every history, no coalition of players can find profitable one- shot deviations. We prove that when monitoring is perfect in both non-transferable and transferable utility games, stable conventions can implement any payo↵ that is feasible and strictly individually rational so long as players are arbitrarily patient. Accordingly, coalitional deviations do not refine behavior beyond the folk theorem for sub-game perfect equilibria. By contrast, if members of a deviating coalition can transfer utility to each other secretly, a stable convention implements payo↵s only within the -core of the stage- game, and all such outcomes can be implemented as players become arbitrarily patient. We use these results to interpret how legal institutions can shape the behavior of individ- uals and coalitions through their expectations of future behavior, and why laws may be undermined when transfers are secret.
El seminario se realizará el MIERCOLES 17 DE OCTUBRE a las 13:00hrs., en la SALA CONSEJO de BEAUCHEF 851, PISO 4, Depto. de Ingeniería Industrial.
Próximos seminarios CEA-MIPP MES DE OCTUBRE
Francisco Pino (FEN U Chile)
Miércoles, 24 de octubre; 13:00 – 14:00
Sala Consejo, piso 4, BP 851, DII
Más información se encuentra disponible en nuestra página web: http://www.mipp.cl/seminars