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The Role of Commitment in Repeated Games
Julio Gonzalez-Dıaz Ignacio Garcıa-Jurado
Department of Statistics and Operations ResearchSchool of Mathematics
Universidade de Santiago de Compostela
IntroductionOutline
Motivation
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
IntroductionOutline
Motivation
Commitment
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
IntroductionOutline
Motivation
Commitment
Repeated games
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
IntroductionOutline
Motivation
Commitment
Repeated games
Unilateral commitments in repeated games
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
IntroductionOutline
Motivation
Commitment
Repeated games
Unilateral commitments in repeated games
Delegation games
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
IntroductionOutline
Outline
1 Virtually Subgame Perfect EquilibriumSome ExamplesFormal DefinitionsDiscussion
2 Unilateral CommitmentsDefinitionsDelegation Models and Unilateral CommitmentsResults
3 Conclusions
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
Some ExamplesFormal DefinitionsDiscussion
Outline
1 Virtually Subgame Perfect EquilibriumSome ExamplesFormal DefinitionsDiscussion
2 Unilateral CommitmentsDefinitionsDelegation Models and Unilateral CommitmentsResults
3 Conclusions
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
Some ExamplesFormal DefinitionsDiscussion
Virtually Subgame Perfect EquilibriumFirst Example
U1
D1
U2
D2
U2
D2
1
2
1 2
(1,1)
(1,0)
(0,1)
(2,-2)
(-2,2)
(-2,2)
(2,-2)
a11
a21
a12
a22
a12
a22
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
Some ExamplesFormal DefinitionsDiscussion
Virtually Subgame Perfect EquilibriumFirst Example
Pure Strategies !!!
U1
D1
U2
D2
U2
D2
1
2
1 2
(1,1)
(1,0)
(0,1)
(2,-2)
(-2,2)
(-2,2)
(2,-2)
a11
a21
a12
a22
a12
a22
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
Some ExamplesFormal DefinitionsDiscussion
Virtually Subgame Perfect EquilibriumFirst Example
Pure Strategies
U1
D1
U2
D2
U2
D2
1
2
1 2
(1,1)
(1,0)
(0,1)
(2,-2)
(-2,2)
(-2,2)
(2,-2)
a11
a21
a12
a22
a12
a22
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
Some ExamplesFormal DefinitionsDiscussion
Virtually Subgame Perfect EquilibriumFirst Example
Pure Strategies
U1
D1
U2
D2
U2
D2
1
2
1 2
(1,1)
(1,0)
(0,1)
(2,-2)
(-2,2)
(-2,2)
(2,-2)
a11
a21
a12
a22
a12
a22
E1
E2
E2
E2
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
Some ExamplesFormal DefinitionsDiscussion
Virtually Subgame Perfect EquilibriumFirst Example
Pure Strategies
U1
D1
U2
D2
U2
D2
1
2
1 2
(1,1)
(1,0)
(0,1)
(2,-2)
(-2,2)
(-2,2)
(2,-2)
a11
a21
a12
a22
a12
a22
E1
E2
E2
E2
a12
a22
(-5,-5)
(-5,-5)
(-5,-5)
(-5,-5)
(-5,-5)
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
Some ExamplesFormal DefinitionsDiscussion
Virtually Subgame Perfect EquilibriumFirst Example
Pure Strategies
U1
D1
U2
D2
U2
D2
1
2
1 2
(1,1)
(1,0)
(0,1)
(2,-2)
(-2,2)
(-2,2)
(2,-2)
a11
a21
a12
a22
a12
a22
E1
E2
E2
E2
a12
a22
(-5,-5)
(-5,-5)
(-5,-5)
(-5,-5)
(-5,-5)
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
Some ExamplesFormal DefinitionsDiscussion
Virtually Subgame Perfect EquilibriumSecond Example
Pure Strategies
1
2
1
2
(1,1)
(1,0)
(0,1)
(1,-1)
(-1,1)
(-1,1)
(1,-1)
U1
D1
U2
D2
U2
D2
a11
a21
a12
a22
a12
a22
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
Some ExamplesFormal DefinitionsDiscussion
Virtually Subgame Perfect EquilibriumSecond Example
Pure Strategies
1
2
1
2
(1,1)
(1,0)
(0,1)
(1,-1)
(-1,1)
(-1,1)
(1,-1)
U1
D1
U2
D2
U2
D2
a11
a21
a12
a22
a12
a22
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
Some ExamplesFormal DefinitionsDiscussion
Virtually Subgame Perfect EquilibriumSecond Example
Pure Strategies
1
2
1
2
(1,1)
(1,0)
(0,1)
(1,-1)
(-1,1)
(-1,1)
(1,-1)
U1
D1
U2
D2
U2
D2
a11
a21
a12
a22
a12
a22
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
Some ExamplesFormal DefinitionsDiscussion
Virtually Subgame Perfect EquilibriumSecond Example
Pure Strategies
1
2
1
2
(1,1)
(1,0)
(0,1)
(1,-1)
(-1,1)
(-1,1)
(1,-1)
U1
D1
U2
D2
U2
D2
a11
a21
a12
a22
a12
a22
Not Subgame Perfect
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
Some ExamplesFormal DefinitionsDiscussion
Virtually Subgame Perfect EquilibriumSecond Example
Pure Strategies
1
2
1
2
(1,1)
(1,0)
(0,1)
(5,5)
(5,5)
(5,5)
(5,5)
U1
D1
U2
D2
U2
D2
a11
a21
a12
a22
a12
a22
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
Some ExamplesFormal DefinitionsDiscussion
Virtually Subgame Perfect EquilibriumSecond Example
Pure Strategies
1
2
1
2
(1,1)
(1,0)
(0,1)
(5,5)
(5,5)
(5,5)
(5,5)
U1
D1
U2
D2
U2
D2
a11
a21
a12
a22
a12
a22
Subgame Perfect!!!
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
Some ExamplesFormal DefinitionsDiscussion
Virtually Subgame Perfect EquilibriumFormal Definitions
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
Some ExamplesFormal DefinitionsDiscussion
Virtually Subgame Perfect EquilibriumFormal Definitions
Let Γ be an extensive-form game and let x and σ be asingle-node information set and a strategy profile, respectively.Then, Γx denotes the subgame of Γ that begins at node x andσx the restriction of σ to Γx. Example
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
Some ExamplesFormal DefinitionsDiscussion
Virtually Subgame Perfect EquilibriumFormal Definitions
Let Γ be an extensive-form game and let x and σ be asingle-node information set and a strategy profile, respectively.Then, Γx denotes the subgame of Γ that begins at node x andσx the restriction of σ to Γx. Example
Now, let Γ be an extensive-form game, σ a strategy profile ofΓ, and x a single-node information set. Then, the subgame Γx
is σ-relevant if either (i) Γx = Γ, or (ii) there are a player i, astrategy σ′
i, and a single-node information set y such that Γy
is σ-relevant and node x is reached by (σ−i, σ′
i)y. Example
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
Some ExamplesFormal DefinitionsDiscussion
Virtually Subgame Perfect EquilibriumFormal Definitions
Let Γ be an extensive-form game and let x and σ be asingle-node information set and a strategy profile, respectively.Then, Γx denotes the subgame of Γ that begins at node x andσx the restriction of σ to Γx. Example
Now, let Γ be an extensive-form game, σ a strategy profile ofΓ, and x a single-node information set. Then, the subgame Γx
is σ-relevant if either (i) Γx = Γ, or (ii) there are a player i, astrategy σ′
i, and a single-node information set y such that Γy
is σ-relevant and node x is reached by (σ−i, σ′
i)y. Example
Let Γ be an extensive-form game. The strategy profile σ is avirtually subgame perfect equilibrium of Γ if for eachσ-relevant subgame Γx, then σx is a Nash equilibrium of Γx.
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
Some ExamplesFormal DefinitionsDiscussion
Virtually Subgame Perfect EquilibriumDiscussion
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
Some ExamplesFormal DefinitionsDiscussion
Virtually Subgame Perfect EquilibriumDiscussion
Subgame Perfect Vs Virtually Subgame Perfect
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
Some ExamplesFormal DefinitionsDiscussion
Virtually Subgame Perfect EquilibriumDiscussion
Subgame Perfect Vs Virtually Subgame Perfect
Why do we need VSPE?
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
Some ExamplesFormal DefinitionsDiscussion
Virtually Subgame Perfect EquilibriumDiscussion
Subgame Perfect Vs Virtually Subgame Perfect
Why do we need VSPE?
In our model, we face very large trees
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
Some ExamplesFormal DefinitionsDiscussion
Virtually Subgame Perfect EquilibriumDiscussion
Subgame Perfect Vs Virtually Subgame Perfect
Why do we need VSPE?
In our model, we face very large trees
There can be subgames with no Nash Equilibrium
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
Some ExamplesFormal DefinitionsDiscussion
Virtually Subgame Perfect EquilibriumDiscussion
Subgame Perfect Vs Virtually Subgame Perfect
Why do we need VSPE?
In our model, we face very large trees
There can be subgames with no Nash Equilibrium
Hence,
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
Some ExamplesFormal DefinitionsDiscussion
Virtually Subgame Perfect EquilibriumDiscussion
Subgame Perfect Vs Virtually Subgame Perfect
Why do we need VSPE?
In our model, we face very large trees
There can be subgames with no Nash Equilibrium
Hence,
We cannot use the classic results for the existence of SPE
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
Outline
1 Virtually Subgame Perfect EquilibriumSome ExamplesFormal DefinitionsDiscussion
2 Unilateral CommitmentsDefinitionsDelegation Models and Unilateral CommitmentsResults
3 Conclusions
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
Unilateral CommitmentsDefinitions
The stage game:
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
Unilateral CommitmentsDefinitions
The stage game: G := (N, A, ϕ)
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
Unilateral CommitmentsDefinitions
The stage game: G := (N, A, ϕ)
N := {1, . . . , n}
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
Unilateral CommitmentsDefinitions
The stage game: G := (N, A, ϕ)
N := {1, . . . , n}A :=
∏
i∈N Ai
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
Unilateral CommitmentsDefinitions
The stage game: G := (N, A, ϕ)
N := {1, . . . , n}A :=
∏
i∈N Ai
ϕ := (ϕ1, . . . , ϕn)
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
Unilateral CommitmentsDefinitions
The stage game: G := (N, A, ϕ)
N := {1, . . . , n}A :=
∏
i∈N Ai
ϕ := (ϕ1, . . . , ϕn)
The repeated game: GTδ := (N, S, ϕδ)
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
Unilateral CommitmentsDefinitions
The stage game: G := (N, A, ϕ)
N := {1, . . . , n}A :=
∏
i∈N Ai
ϕ := (ϕ1, . . . , ϕn)
The repeated game: GTδ := (N, S, ϕδ)
N := {1, . . . , n}S :=
∏
i∈N Si
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
Unilateral CommitmentsDefinitions
The stage game: G := (N, A, ϕ)
N := {1, . . . , n}A :=
∏
i∈N Ai
ϕ := (ϕ1, . . . , ϕn)
The repeated game: GTδ := (N, S, ϕδ)
N := {1, . . . , n}S :=
∏
i∈N Si
(Si := AHi )
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
Unilateral CommitmentsDefinitions
The stage game: G := (N, A, ϕ)
N := {1, . . . , n}A :=
∏
i∈N Ai
ϕ := (ϕ1, . . . , ϕn)
The repeated game: GTδ := (N, S, ϕδ)
N := {1, . . . , n}S :=
∏
i∈N Si
(Si := AHi )
ϕδ
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
Unilateral CommitmentsDefinitions
The stage game: G := (N, A, ϕ)
N := {1, . . . , n}A :=
∏
i∈N Ai
ϕ := (ϕ1, . . . , ϕn)
The repeated game: GTδ := (N, S, ϕδ)
N := {1, . . . , n}S :=
∏
i∈N Si
(Si := AHi )
ϕδ
The UC-extension: U(G) := (N, AU , ϕU )
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
Unilateral CommitmentsDefinitions
The stage game: G := (N, A, ϕ)
N := {1, . . . , n}A :=
∏
i∈N Ai
ϕ := (ϕ1, . . . , ϕn)
The repeated game: GTδ := (N, S, ϕδ)
N := {1, . . . , n}S :=
∏
i∈N Si
(Si := AHi )
ϕδ
The UC-extension: U(G) := (N, AU , ϕU )
AU :=∏
i∈N AUi , where AU
i is the set of all couples (Aci , αi)
such that
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
Unilateral CommitmentsDefinitions
The stage game: G := (N, A, ϕ)
N := {1, . . . , n}A :=
∏
i∈N Ai
ϕ := (ϕ1, . . . , ϕn)
The repeated game: GTδ := (N, S, ϕδ)
N := {1, . . . , n}S :=
∏
i∈N Si
(Si := AHi )
ϕδ
The UC-extension: U(G) := (N, AU , ϕU )
AU :=∏
i∈N AUi , where AU
i is the set of all couples (Aci , αi)
such that1 ∅ ( Ac
i ⊆ Ai,
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
Unilateral CommitmentsDefinitions
The stage game: G := (N, A, ϕ)
N := {1, . . . , n}A :=
∏
i∈N Ai
ϕ := (ϕ1, . . . , ϕn)
The repeated game: GTδ := (N, S, ϕδ)
N := {1, . . . , n}S :=
∏
i∈N Si
(Si := AHi )
ϕδ
The UC-extension: U(G) := (N, AU , ϕU )
AU :=∏
i∈N AUi , where AU
i is the set of all couples (Aci , αi)
such that1 ∅ ( Ac
i ⊆ Ai,2 αi :
∏
j∈N 2Aj −→ Ai
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
Unilateral CommitmentsDefinitions
The stage game: G := (N, A, ϕ)
N := {1, . . . , n}A :=
∏
i∈N Ai
ϕ := (ϕ1, . . . , ϕn)
The repeated game: GTδ := (N, S, ϕδ)
N := {1, . . . , n}S :=
∏
i∈N Si
(Si := AHi )
ϕδ
The UC-extension: U(G) := (N, AU , ϕU )
AU :=∏
i∈N AUi , where AU
i is the set of all couples (Aci , αi)
such that1 ∅ ( Ac
i ⊆ Ai,2 αi :
∏
j∈N 2Aj −→ Ai and, for each Ac ∈∏
j∈N 2Aj ,αi(A
c) ∈ Aci .
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
Unilateral CommitmentsDefinitions
The stage game: G := (N, A, ϕ)
N := {1, . . . , n}A :=
∏
i∈N Ai
ϕ := (ϕ1, . . . , ϕn)
The repeated game: GTδ := (N, S, ϕδ)
N := {1, . . . , n}S :=
∏
i∈N Si
(Si := AHi )
ϕδ
The UC-extension: U(G) := (N, AU , ϕU )
AU :=∏
i∈N AUi , where AU
i is the set of all couples (Aci , αi)
such that1 ∅ ( Ac
i ⊆ Ai,2 αi :
∏
j∈N 2Aj −→ Ai and, for each Ac ∈∏
j∈N 2Aj ,αi(A
c) ∈ Aci .
Commitments are UnilateralJulio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
Unilateral CommitmentsDefinitions
The stage game: G := (N, A, ϕ)
N := {1, . . . , n}A :=
∏
i∈N Ai
ϕ := (ϕ1, . . . , ϕn)
The repeated game: GTδ := (N, S, ϕδ)
N := {1, . . . , n}S :=
∏
i∈N Si
(Si := AHi )
ϕδ
The UC-extension: U(G) := (N, AU , ϕU )
AU :=∏
i∈N AUi , where AU
i is the set of all couples (Aci , αi)
such that1 ∅ ( Ac
i ⊆ Ai,2 αi :
∏
j∈N 2Aj −→ Ai and, for each Ac ∈∏
j∈N 2Aj ,αi(A
c) ∈ Aci .
Commitments are Unilateral Complete Information
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
Delegation Models and Unilateral Commitments
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
Delegation Models and Unilateral Commitments
Fershtman et al (1991)
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
Delegation Models and Unilateral Commitments
Fershtman et al (1991)
Players: 2 principals, 2 agents
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
Delegation Models and Unilateral Commitments
Fershtman et al (1991)
Players: 2 principals, 2 agents
Compensation Monotonic FunctionSchemes:
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
Delegation Models and Unilateral Commitments
Fershtman et al (1991)
Players: 2 principals, 2 agents
Compensation Monotonic FunctionSchemes: depend on the payoffs
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
Delegation Models and Unilateral Commitments
Fershtman et al (1991)
Players: 2 principals, 2 agents
Compensation Monotonic FunctionSchemes: depend on the payoffs
Contracts: Public
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
Delegation Models and Unilateral Commitments
Fershtman et al (1991) Our Model
Players: 2 principals, 2 agents
Compensation Monotonic FunctionSchemes: depend on the payoffs
Contracts: Public
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
Delegation Models and Unilateral Commitments
Fershtman et al (1991) Our Model
Players: 2 principals, 2 agents 2 principals, 2 agents
Compensation Monotonic FunctionSchemes: depend on the payoffs
Contracts: Public
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
Delegation Models and Unilateral Commitments
Fershtman et al (1991) Our Model
Players: 2 principals, 2 agents 2 principals, 2 agents
Compensation Monotonic Function Proportional within Ac
Schemes: depend on the payoffs
Contracts: Public
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
Delegation Models and Unilateral Commitments
Fershtman et al (1991) Our Model
Players: 2 principals, 2 agents 2 principals, 2 agents
Compensation Monotonic Function Proportional within Ac
Schemes: depend on the payoffs depend on the strategies
Contracts: Public
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
Delegation Models and Unilateral Commitments
Fershtman et al (1991) Our Model
Players: 2 principals, 2 agents 2 principals, 2 agents
Compensation Monotonic Function Proportional within Ac
Schemes: depend on the payoffs depend on the strategies
Contracts: Public Public
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
Delegation Models and Unilateral Commitments
Fershtman et al (1991) Our Model
Players: 2 principals, 2 agents 2 principals, 2 agents
Compensation Monotonic Function Proportional within Ac
Schemes: depend on the payoffs depend on the strategies
Contracts: Public PublicComplete Information!!!
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
Delegation Models and Unilateral Commitments
Fershtman et al (1991) Our Model
Players: 2 principals, 2 agents 2 principals, 2 agents
Compensation Monotonic Function Proportional within Ac
Schemes: depend on the payoffs depend on the strategies
Contracts: Public Public
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
Unilateral Commitments
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
Unilateral Commitments
Objectives
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
Unilateral Commitments
Objectives
Results:
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
Unilateral Commitments
Objectives
Results:
The Folk Theorems
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
Unilateral Commitments
Objectives
Results:
The Folk Theorems
Minmax Payoffs:
vi = mina−i∈A−i
maxai∈Ai
ϕi(ai, a−i)
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
Unilateral Commitments
Objectives
Results:
The Folk Theorems
Minmax Payoffs:
vi = mina−i∈A−i
maxai∈Ai
ϕi(ai, a−i)
Feasible and Individually Rational Payoffs:
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
Unilateral Commitments
Objectives
Results:
The Folk Theorems
Minmax Payoffs:
vi = mina−i∈A−i
maxai∈Ai
ϕi(ai, a−i)
Feasible and Individually Rational Payoffs:
F := co{ϕ(a) : a ∈ ϕ(A)}
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
Unilateral Commitments
Objectives
Results:
The Folk Theorems
Minmax Payoffs:
vi = mina−i∈A−i
maxai∈Ai
ϕi(ai, a−i)
Feasible and Individually Rational Payoffs:
F := co{ϕ(a) : a ∈ ϕ(A)} F := F ∩ {u ∈ Rn : u ≥ v}
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
The Folk TheoremsFinite Horizon
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
The Folk TheoremsFinite Horizon
Nash Folk Theorem (without UC)
G must have a Nash equilibrium in which some player gets morethan his minmax payoff
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
The Folk TheoremsFinite Horizon
Nash Folk Theorem (without UC)
G must have a Nash equilibrium in which some player gets morethan his minmax payoff
Theorem 1 (Garcıa-Jurado et al., 2000)
No assumption is needed for the Nash folk theorem with UC.
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
The Folk TheoremsFinite Horizon
Nash Folk Theorem (without UC)
G must have a Nash equilibrium in which some player gets morethan his minmax payoff
Theorem 1 (Garcıa-Jurado et al., 2000)
No assumption is needed for the Nash folk theorem with UC.
Proof
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
The Folk TheoremsFinite Horizon
Nash Folk Theorem (without UC)
G must have a Nash equilibrium in which some player gets morethan his minmax payoff
Theorem 1 (Garcıa-Jurado et al., 2000)
No assumption is needed for the Nash folk theorem with UC.
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
The Folk TheoremsFinite Horizon
Nash Folk Theorem (without UC)
G must have a Nash equilibrium in which some player gets morethan his minmax payoff
Theorem 1 (Garcıa-Jurado et al., 2000)
No assumption is needed for the Nash folk theorem with UC.
Moreover, the Nash equilibrium of the repeated game with UCcan be chosen such that
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
The Folk TheoremsFinite Horizon
Nash Folk Theorem (without UC)
G must have a Nash equilibrium in which some player gets morethan his minmax payoff
Theorem 1 (Garcıa-Jurado et al., 2000)
No assumption is needed for the Nash folk theorem with UC.
Moreover, the Nash equilibrium of the repeated game with UCcan be chosen such that the subgame that begins after thecommitments has a unique Nash payoff
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
The Folk TheoremsFinite Horizon
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
The Folk TheoremsFinite Horizon
Subgame Perfect Folk Theorem (without UC)
G must have a pair of Nash equilibra in which some player getsdifferent payoffs
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
The Folk TheoremsFinite Horizon
Subgame Perfect Folk Theorem (without UC)
G must have a pair of Nash equilibra in which some player getsdifferent payoffs
Proposition 1
The counterpart of Theorem 1 for VSPE does not hold.
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
The Folk TheoremsFinite Horizon
Subgame Perfect Folk Theorem (without UC)
G must have a pair of Nash equilibra in which some player getsdifferent payoffs
Proposition 1
The counterpart of Theorem 1 for VSPE does not hold.
Proposition 2
Let a ∈ A be a Nash equilibrium of G. Then, the game U(G) hasa VSPE with payoff ϕ(a).
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
The Folk TheoremsFinite Horizon
Subgame Perfect Folk Theorem (without UC)
G must have a pair of Nash equilibra in which some player getsdifferent payoffs
Proposition 1
The counterpart of Theorem 1 for VSPE does not hold.
Proposition 2
Let a ∈ A be a Nash equilibrium of G. Then, the game U(G) hasa VSPE with payoff ϕ(a).
Theorem 2No assumption is needed for the VSPE folk theorem when we havetwo stages of commitments.
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
The Folk TheoremsFinite Horizon
Theorem 1 No assumptions for the Nash folk theorem with UC.Proposition 2 Let a ∈ A be a Nash equilibrium of G. Then, thegame U(G) has a VSPE with payoff ϕ(a).
Theorem 2No assumption is needed for the VSPE folk theorem when we havetwo stages of commitments.
Proof
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
The Folk TheoremsFinite Horizon
Theorem 1 No assumptions for the Nash folk theorem with UC.Proposition 2 Let a ∈ A be a Nash equilibrium of G. Then, thegame U(G) has a VSPE with payoff ϕ(a).
Theorem 2No assumption is needed for the VSPE folk theorem when we havetwo stages of commitments.
Proof
1 Apply Theorem 1 to G(δ, T )
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
The Folk TheoremsFinite Horizon
Theorem 1 No assumptions for the Nash folk theorem with UC.Proposition 2 Let a ∈ A be a Nash equilibrium of G. Then, thegame U(G) has a VSPE with payoff ϕ(a).
Theorem 2No assumption is needed for the VSPE folk theorem when we havetwo stages of commitments.
Proof
1 Apply Theorem 1 to G(δ, T ) =⇒ U(G(δ, T )) has a Nash
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
The Folk TheoremsFinite Horizon
Theorem 1 No assumptions for the Nash folk theorem with UC.Proposition 2 Let a ∈ A be a Nash equilibrium of G. Then, thegame U(G) has a VSPE with payoff ϕ(a).
Theorem 2No assumption is needed for the VSPE folk theorem when we havetwo stages of commitments.
Proof
1 Apply Theorem 1 to G(δ, T ) =⇒ U(G(δ, T )) has a Nash
2 Apply Proposition 2 to U(G(δ, T ))
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
The Folk TheoremsFinite Horizon
Theorem 1 No assumptions for the Nash folk theorem with UC.Proposition 2 Let a ∈ A be a Nash equilibrium of G. Then, thegame U(G) has a VSPE with payoff ϕ(a).
Theorem 2No assumption is needed for the VSPE folk theorem when we havetwo stages of commitments.
Proof
1 Apply Theorem 1 to G(δ, T ) =⇒ U(G(δ, T )) has a Nash
2 Apply Proposition 2 to U(G(δ, T ))=⇒ U(U(G(δ, T ))) has a VSPE
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
The Folk TheoremsFinite Horizon
Theorem 1 No assumptions for the Nash folk theorem with UC.Proposition 2 Let a ∈ A be a Nash equilibrium of G. Then, thegame U(G) has a VSPE with payoff ϕ(a).
Theorem 2No assumption is needed for the VSPE folk theorem when we havetwo stages of commitments.
Proof
1 Apply Theorem 1 to G(δ, T ) =⇒ U(G(δ, T )) has a Nash
2 Apply Proposition 2 to U(G(δ, T ))=⇒ U(U(G(δ, T ))) has a VSPE
Moreover, the VSPE can be chosen such that
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
The Folk TheoremsFinite Horizon
Theorem 1 No assumptions for the Nash folk theorem with UC.Proposition 2 Let a ∈ A be a Nash equilibrium of G. Then, thegame U(G) has a VSPE with payoff ϕ(a).
Theorem 2No assumption is needed for the VSPE folk theorem when we havetwo stages of commitments.
Proof
1 Apply Theorem 1 to G(δ, T ) =⇒ U(G(δ, T )) has a Nash
2 Apply Proposition 2 to U(G(δ, T ))=⇒ U(U(G(δ, T ))) has a VSPE
Moreover, the VSPE can be chosen such that the subgamethat begins after the first stage of commitments has a uniqueNash payoff
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
The Folk TheoremsDiscussion
Theorem 2No assumption is needed for the VSPE folk theorem when we havetwo stages of commitments.
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
The Folk TheoremsDiscussion
Theorem 2No assumption is needed for the VSPE folk theorem when we havetwo stages of commitments.
Remarks
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
The Folk TheoremsDiscussion
Theorem 2No assumption is needed for the VSPE folk theorem when we havetwo stages of commitments.
Remarks
Are two stages of commitments natural??
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
The Folk TheoremsDiscussion
Theorem 2No assumption is needed for the VSPE folk theorem when we havetwo stages of commitments.
Remarks
Are two stages of commitments natural??
We “allow for” commitments on commitments
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
DefinitionsDelegation Models and Unilateral CommitmentsResults
The Folk TheoremsDiscussion
Theorem 2No assumption is needed for the VSPE folk theorem when we havetwo stages of commitments.
Remarks
Are two stages of commitments natural??
We “allow for” commitments on commitments
President −→ Manager −→ Director
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
The State of ArtNecessary and Sufficient Conditions for the Folk Theorems
Without UC 1 stage of UC2 stagesof UC
Nash Theorem NoneInfinite Horizon (Fudenberg and Maskin, 1986)
(Virtual) Perfect Th. Non-Equivalent UtilitiesInfinite Horizon (Abreu et al., 1994)
Nash Theorem Minimax-Bettering LadderFinite Horizon (Gonzalez-Dıaz, 2003)
(Virtual) Perfect Th. Recursively-distinctFinite Horizon Nash payoffs (Smith, 1995)
The State of ArtNecessary and Sufficient Conditions for the Folk Theorems
Without UC 1 stage of UC2 stagesof UC
Nash Theorem None NoneInfinite Horizon (Fudenberg and Maskin, 1986) (Prop. 2)
(Virtual) Perfect Th. Non-Equivalent Utilities NoneInfinite Horizon (Abreu et al., 1994) (Prop. 2)
Nash Theorem Minimax-Bettering LadderFinite Horizon (Gonzalez-Dıaz, 2003)
(Virtual) Perfect Th. Recursively-distinctFinite Horizon Nash payoffs (Smith, 1995)
The State of ArtNecessary and Sufficient Conditions for the Folk Theorems
Without UC 1 stage of UC2 stagesof UC
Nash Theorem None NoneInfinite Horizon (Fudenberg and Maskin, 1986) (Prop. 2)
(Virtual) Perfect Th. Non-Equivalent Utilities NoneInfinite Horizon (Abreu et al., 1994) (Prop. 2)
Nash Theorem Minimax-Bettering Ladder NoneFinite Horizon (Gonzalez-Dıaz, 2003) (Garcıa-Jurado et al., 2000)
(Virtual) Perfect Th. Recursively-distinctFinite Horizon Nash payoffs (Smith, 1995)
The State of ArtNecessary and Sufficient Conditions for the Folk Theorems
Without UC 1 stage of UC2 stagesof UC
Nash Theorem None NoneInfinite Horizon (Fudenberg and Maskin, 1986) (Prop. 2)
(Virtual) Perfect Th. Non-Equivalent Utilities NoneInfinite Horizon (Abreu et al., 1994) (Prop. 2)
Nash Theorem Minimax-Bettering Ladder NoneFinite Horizon (Gonzalez-Dıaz, 2003) (Garcıa-Jurado et al., 2000)
(Virtual) Perfect Th. Recursively-distinct Minimax-Bettering LadderFinite Horizon Nash payoffs (Smith, 1995) (Prop. 2, only sufficient)
The State of ArtNecessary and Sufficient Conditions for the Folk Theorems
Without UC 1 stage of UC2 stagesof UC
Nash Theorem None None NoneInfinite Horizon (Fudenberg and Maskin, 1986) (Prop. 2) (Prop. 2)
(Virtual) Perfect Th. Non-Equivalent Utilities None NoneInfinite Horizon (Abreu et al., 1994) (Prop. 2) (Prop. 2)
Nash Theorem Minimax-Bettering Ladder None NoneFinite Horizon (Gonzalez-Dıaz, 2003) (Garcıa-Jurado et al., 2000) (Prop. 2)
(Virtual) Perfect Th. Recursively-distinct Minimax-Bettering Ladder NoneFinite Horizon Nash payoffs (Smith, 1995) (Prop. 2, only sufficient) (Th. 2)
VSPEUnilateral Commitments
Conclusions
Outline
1 Virtually Subgame Perfect EquilibriumSome ExamplesFormal DefinitionsDiscussion
2 Unilateral CommitmentsDefinitionsDelegation Models and Unilateral CommitmentsResults
3 Conclusions
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
Conclusions
Our contribution
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
Conclusions
Our contribution
UC lead to weaker assumptions for the folk theorems.
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
Conclusions
Our contribution
UC lead to weaker assumptions for the folk theorems.
Nonetheless, some assumptions are still needed for someVSPE folk theorems.
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
VSPEUnilateral Commitments
Conclusions
Thanks
Julio Gonzalez-Dıaz, Ignacio Garcıa-Jurado The Role of Commitment in Repeated Games
1
2
1
2
(1,1)
(1,0)
(0,1)
(1,-1)
(-1,1)
(-1,1)
(1,-1)
U1
D1
U2
D2
U2
D2
a11
a21
a12
a22
a12
a22
Return
1
2
1
2
(1,1)
(1,0)
(0,1)
(1,-1)
(-1,1)
(-1,1)
(1,-1)
U1
D1
U2
D2
U2
D2
a11
a21
a12
a22
a12
a22
Return
1
2
1
2
(1,1)
(1,0)
(0,1)
(1,-1)
(-1,1)
(-1,1)
(1,-1)
U1
D1
U2
D2
U2
D2
a11
a21
a12
a22
a12
a22
Return
Return
1
2
1
2
21
Return
1
2
1
2
21
σ
Return
1
2
1
2
21
σ
Return
1
2
1
2
21
σ
Return
1
2
1
2
21
σ
Return
Return
Proof
Return
ProofLet u ∈ F and let a ∈ A be such that ϕ(a) = u
Return
ProofLet u ∈ F and let a ∈ A be such that ϕ(a) = u
Strategy for a player i
Return
ProofLet u ∈ F and let a ∈ A be such that ϕ(a) = u
Strategy for a player i
1 Commitment: Sci := “If a is played in the first stage, then I
play ai forever”
Return
ProofLet u ∈ F and let a ∈ A be such that ϕ(a) = u
Strategy for a player i
1 Commitment: Sci := “If a is played in the first stage, then I
play ai forever”2 Strategy:
Return
ProofLet u ∈ F and let a ∈ A be such that ϕ(a) = u
Strategy for a player i
1 Commitment: Sci := “If a is played in the first stage, then I
play ai forever”2 Strategy:
If Sc = Sc:
Return
ProofLet u ∈ F and let a ∈ A be such that ϕ(a) = u
Strategy for a player i
1 Commitment: Sci := “If a is played in the first stage, then I
play ai forever”2 Strategy:
If Sc = Sc:
i plays ai in the first stage
Return
ProofLet u ∈ F and let a ∈ A be such that ϕ(a) = u
Strategy for a player i
1 Commitment: Sci := “If a is played in the first stage, then I
play ai forever”2 Strategy:
If Sc = Sc:
i plays ai in the first stage
If someone deviates i punishes him forever
Return
ProofLet u ∈ F and let a ∈ A be such that ϕ(a) = u
Strategy for a player i
1 Commitment: Sci := “If a is played in the first stage, then I
play ai forever”2 Strategy:
If Sc = Sc:
i plays ai in the first stage
If someone deviates i punishes him forever
If someone has deviated from the commitment i punishes himforever
Return
Return