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Renegotiation in repeated games. (English) Zbl 0754.90082
Summary: In repeated games, subgame-perfect equilibria involving threats of punishment may be implausible if punishing one player hurts the other(s). If players can renegotiate after a defection, such a punishment may not be carried out. We explore a solution concept that recognizes this fact, and show that in many games the prospect of renegotiation strictly limits the cooperative outcomes that can be sustained. We characterize those outcomes in general, and in the prisoner’s dilemma, Cournot and Bertrand duopolies, and an advertising game in particular.

91A20 Multistage and repeated games
91B26 Auctions, bargaining, bidding and selling, and other market models
90B60 Marketing, advertising
91A80 Applications of game theory
Full Text: DOI
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