A Tractable Analysis of Contagious Equilibria

41 Pages Posted: 23 Dec 2014

See all articles by Gabriele Camera

Gabriele Camera

Chapman University - Economic Science Institute; University of Bologna - Dept. of Economics

Alessandro Gioffré

University of Florence - Department of Economics and Management; Goethe University Frankfurt - Research Center SAFE

Date Written: July 11, 2013

Abstract

This paper studies contagious equilibrium in infinitely repeated matching games. The innovation is to identify a key statistic of contagious punishment that, used together with a recursive formulation, generates tractable closed-form expressions for continuation payoffs, off equilibrium. This allows a transparent characterization of the dynamic incentives created by contagious punishment schemes.

Keywords: Cooperation, social norms, grim trigger, random matching

JEL Classification: C6, C7

Suggested Citation

Camera, Gabriele and Gioffré, Alessandro, A Tractable Analysis of Contagious Equilibria (July 11, 2013). Available at SSRN: https://ssrn.com/abstract=2541951 or http://dx.doi.org/10.2139/ssrn.2541951

Gabriele Camera (Contact Author)

Chapman University - Economic Science Institute ( email )

Orange, CA 92866
United States

HOME PAGE: http://www1.chapman.edu/~camera/

University of Bologna - Dept. of Economics ( email )

Strada Maggiore 45
Bologna, 40125
Italy

Alessandro Gioffré

University of Florence - Department of Economics and Management ( email )

Via delle Pandette, 9
Firenze, Florence 50127
Italy

Goethe University Frankfurt - Research Center SAFE ( email )

(http://www.safe-frankfurt.de)
Theodor-W.-Adorno-Platz 3
Frankfurt am Main, 60323
Germany

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