Unique and Optimal Perfect Equilibrium
نویسندگان
چکیده
This paper proves a First Welfare Theorem for Games it shows that asynchronous dynamic games with voluntary one period ahead transfers have a unique optimal equilibrium. The equilibrium coincides with the Utilitarian Pareto Optimum and hence can be computed from a (simpler) programming problem (rather than as a fixed point). Whilst it is commonly thought that Folk Theorems are endemic in dynamic games, this paper shows that two simple changes in the standard model give us the other extreme a unique optimal equilibrium. More broadly, this paper is a contribution towards uniting Mechanism Design and Repeated Games.
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