Horner, Johannes; Klein, Nicolas; Rady, Sven - Cowles Foundation for Research in Economics, Yale University - 2014
equilibria. This is valuable for three reasons. First, these equations retain the tractability of Markov equilibrium, while … allowing for punishments and rewards: the best and worst equilibrium payoff are explicitly solved for. Second, they capture … their solution. Third, they encompass a large payoff set: there is no perfect Bayesian equilibrium in the discrete-time game …