This entry shows why self-interested agents manage to cooperate in a long-term relationship. When agents interact only once, they often have an incentive to deviate from cooperation. In a repeated interaction, however, any mutually beneficial outcome can be sustained in an equilibrium. This...

　　 Humans are capable of cooperating with one another even when it is costly and a deviation provides an immediate gain. An important reason is that cooperation is reciprocated or rewarded and deviations are penalized in later stages. For cooperation to be sustainable, not only...

Randomization is an effective way of extracting information from a limited number of observations, as random auditing shows. We employ this idea to support efficient outcomes in repeated games with imperfect monitoring, when information is severely limited. In particular, we show that efficiency...

This paper provides a way to formulate a general equilibrium model with both infinite time horizon and continuous uncertainty by 2.space, and provides a si mple proof of the equiva-lence of equilibria in complete markets, inc omplete markets with sequential trading, and incomplete markets with...

An equilibrium in an infinite horizon game is called a finite state equilibrium, if each player's action on the equilibrium path is given by an automaton with a finite state space. We provide a complete characterization of this class of equilibria and provide a recursive computational method to...