The Folk Theorem in Repeated Games with Endogenous Termination

30 Pages Posted: 8 Nov 2018 Last revised: 8 Mar 2019

See all articles by Takako Fujiwara-Greve

Takako Fujiwara-Greve

Keio University - Faculty of Economics

Yosuke Yasuda

Osaka University - Graduate School of Economics

Date Written: March 5, 2019

Abstract

In the current mobile world, repeated relationships must be self-sustained by the members. We extend the framework of infinitely repeated games to incorporate the possibility that the game is strategically terminated by players. Specifically, we add a voting stage at the beginning of each period where some or all players vote on whether to continue or end the interaction, and if the game ends, players receive predetermined payoffs. We study general majority rules and show that the appropriately modified folk theorem holds except for the unanimity rule. We also derive sufficient conditions for the folk theorem under the unanimity rule.

Keywords: repeated game, folk theorem, termination

JEL Classification: C73

Suggested Citation

Fujiwara-Greve, Takako and Yasuda, Yosuke, The Folk Theorem in Repeated Games with Endogenous Termination (March 5, 2019). Available at SSRN: https://ssrn.com/abstract=3267427 or http://dx.doi.org/10.2139/ssrn.3267427

Takako Fujiwara-Greve

Keio University - Faculty of Economics ( email )

2-15-45 Mita, Ninato-ku
Tokyo 1088345
Japan

Yosuke Yasuda (Contact Author)

Osaka University - Graduate School of Economics ( email )

1-7 Machikaneyama
Toyonaka, Osaka, 560-0043
Japan

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