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Finitely repeated games with social preferences

Oechssler, Jörg

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Translation of abstract (English)

A well—known result from the theory of finitely repeated games states that if the stage game has a unique equilibrium, then there is a unique subgame perfect equilibrium in the finitely repeated game in which the equilibrium of the stage game is being played in every period. Here I show that this result does in general not hold anymore if players have social preferences of the form frequently assumed in the recent literature, for example in the inequity aversion models of Fehr and Schmidt (1999) or Bolton and Ockenfels (2000). In fact, repeating the unique stage game equilibrium may not be a subgame perfect equilibrium at all.

Item Type: Working paper
Date Deposited: 11. Apr 2011 14:56
Date: 2011
Faculties / Institutes: The Faculty of Economics and Social Studies > Alfred-Weber-Institut for Economics
Subjects: 330 Economics
Uncontrolled Keywords: social preferences , finitely repeated games , inequity aversion , ERC
Schriftenreihe ID: Discussion Paper Series / University of Heidelberg, Department of Economics
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