Finite Horizon Asynchronous Games with Transfers: A Welfare Theorem∗

This paper and its companion piece, Dutta-Siconolfi (2016a) prove a First Welfare Theorem for Games. It is shown that finite horizon asynchronous games with voluntary one period ahead transfers have a unique equilibrium that coincides with the Utilitarian Pareto Optimum. Whilst it is commonly thought that Folk Theorems are endemic in dynamic games, the result relies critically on two assumptions simultaneous moves and no transfers. Yet asynchronicity and transfers are observed in many applications. We also show that the actions and transfers implied by our result are Markovian and easy to compute.