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|Abstract:||Consider repeated two-player games with perfect monitoring and discounting. We provide an algorithm that computes the set V* of payoff pairs of all pure-strategy subgame-perfect equilibria with public randomization. The algorithm provides significant efficiency gains over the existing implementations of the algorithm from Abreu et al. (1990). These efficiency gains arise from a better understanding of the manner in which extreme points of the equilibrium payoff set are generated. An important theoretical implication of our algorithm is that the set of extreme points E of V* is finite. Indeed, |E| 3|A|, where A is the set of action profiles of the stage game. © 2014 Dilip Abreu and Yuliy Sannikov.|
|Citation:||Abreu, D, Sannikov, Y. (2014). An algorithm for two-player repeated games with perfect monitoring. Theoretical Economics, 9 (2), 313 - 338. doi:10.3982/TE1302|
|Pages:||313 - 338|
|Type of Material:||Journal Article|
|Journal/Proceeding Title:||Theoretical Economics|
|Version:||Final published version. This is an open access article.|
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