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On the feasible payoff set of two-player repeated games with unequal discounting

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Abstract

We provide a novel characterization of the feasible payoff set of a general two-player repeated game with unequal discounting. In particular, we show that generically the Pareto frontier shifts outwards and the feasible payoff set expands in the sense of set inclusion, as the time horizon increases. This result reinforces and refines the insight in Lehrer and Pauzner (1999) by showing that a longer horizon enables the players to conduct intertemporal trade in a more flexible fashion.

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Authors and Affiliations

  1. Department of Economics, Southern Methodist University, Dallas, TX, USA

    Bo Chen

  2. Research Institute for Mathematical Sciences, Kyoto University, Kyoto, Japan

    Satoru Fujishige

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  1. Bo Chen
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  2. Satoru Fujishige
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Correspondence to Bo Chen.

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Chen, B., Fujishige, S. On the feasible payoff set of two-player repeated games with unequal discounting. Int J Game Theory 42, 295–303 (2013). https://doi.org/10.1007/s00182-012-0354-6

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  • DOI: https://doi.org/10.1007/s00182-012-0354-6

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