Econometrica: Mar 1974, Volume 42, Issue 2
Non-Cooperative Equilibria in Time-Dependent Supergames
James W. FriedmanThis paper is concerned with "supergames" in which the action taken in a given time period by a player will affect the payoff to any other player in the subsequent period. A supergame consists of a set of players and a countable sequence of "ordinary" games. To illustrate "time-dependence," consider an economic market in discrete time. Say each firm must choose a price in each time period. This market has time-dependence if the amount demanded of a firm today is a function of the prices chosen today and of the prices chosen in the preceding period. Conditions are given for the existence of non-cooperative equilibria of two types: (i) steady state, in which the individual moves of the players converge over time to some s^0 and (ii) balance temptation equilibria of the sort developed by Friedman  for games lacking time dependence.
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