Robust Predictions in Infinite-horizon Gamesan Unrefinable Folk Theorem
نویسندگان
چکیده
We show that in any game that is continuous at in nity, if a plan of action ai is played by a type ti in a Bayesian Nash equilibrium, then there are perturbations of ti for which ai is the only rationalizable plan and whose unique rationalizable belief regarding the play of the game is arbitrarily close to the equilibrium belief of ti. As an application to repeated games, we prove an unre nable folk theorem: Any individually rational and feasible payo¤ is the unique rationalizable payo¤ vector for some perturbed type pro le. This is true even if perturbed types are restricted to believe that the repeated-game payo¤ structure and the discount factor are common knowledge. JEL Numbers: C72, C73.
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