Switching costs in infinitely repeated games
We show that small switching costs can have surprisingly dramatic effects in infinitely repeated games if these costs are large relative to payoffs in a single period. This shows that the results in Lipman and Wang do have analogs in the case of infinitely repeated games [Lipman, B., Wang, R., 2000. Switching costs in frequently repeated games. J. Econ. Theory 93, August 2000, 149-190]. We also discuss whether the results here or those in Lipman-Wang imply a discontinuity in the equilibrium outcome correspondence with respect to small switching costs. We conclude that there is not a discontinuity with respect to switching costs but that the switching costs do create a discontinuity with respect to the length of a period.
Year of publication: |
2009
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Authors: | Lipman, Barton L. ; Wang, Ruqu |
Published in: |
Games and Economic Behavior. - Elsevier, ISSN 0899-8256. - Vol. 66.2009, 1, p. 292-314
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Publisher: |
Elsevier |
Saved in:
Online Resource
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