Equilibrium payoffs in two-player discounted OLG games

Abstract This paper studies payoffs in subgame perfect equilibria of two-player discounted overlapping generations games with monitoring. Assuming that mixed strategies are observable and a public randomization device is available, it shown sufficiently patient players can obtain any the interior smallest rectangle containing feasible strictly individually rational stage game, when we first choose rate discount then players’ lifespan. Unlike repeated without generations, obtaining outside set game does not require unequal discounting.