Repeated Games Played by Overlapping Generations of Players.

The present paper tries to explain cooperative behavior in an organization run by a sequence of long- but finitely-lived agents. The author shows that the Folk theorem holds for infinitely repeated games with overlapping generations of finitely-lived players; any mutually beneficial outcome can approximately be sustained if the player's life span and the overlapping periods are long enough. The result is stronger than the usual Folk theorems in that it employs no assumption on the stage game, such as the full dimensionality of payoff set or multiplicity of equilibria. Copyright 1992 by The Review of Economic Studies Limited.