Belief-free Equilibria in Repeated Games

J. Ely, J. HÖRNER, W. Olszewski


mars-mai 2005, vol. 73, n°2, pp.377-415

Départements : Finance

We introduce a class of strategies that generalizes examples constructed in two-player games under imperfect private monitoring. A sequential equilibrium is belief-free if, after every private history, each player's continuation strategy is optimal independently of his belief about his opponents' private histories. We provide a simple and sharp characterization of equilibrium payoffs using those strategies. While such strategies support a large set of payoffs, they are not rich enough to generate a folk theorem in most games besides the prisoner's dilemma, even when noise vanishes