On the feasible payoff set of two-player repeated games with unequal discounting

We provide a novel characterization of the feasible payoff set of a general two-player repeated game with unequal discounting. In particular, we show that generically the Pareto frontier shifts outwards and the feasible payoff set expands in the sense of set inclusion, as the time horizon increases. This result reinforces and refines the insight in Lehrer and Pauzner (<CitationRef CitationID="CR7">1999</CitationRef>) by showing that a longer horizon enables the players to conduct intertemporal trade in a more flexible fashion. Copyright Springer-Verlag Berlin Heidelberg 2013