Stable Agreements in Infinitely Repeated Games

This paper studies infinitely repeated games where players can form coalitions to coordinate their actions via self-enforcing agreements. The proposed notion of "stable agreements" extends a characterization of the set of subgame perfect equilibrium paths by Greenberg (1989, 1990) to account for self-enforcing coalitional deviations. An agreement is stable if no coalition can deviate in such a way that by solely coordinating the actions of its own members, it guarantees a higher payoff for each member. Existence of the proposed notion is established and its relation to other notions is investigated.