Econometrica: Jul 2020, Volume 88, Issue 4

Revision Games

https://doi.org/10.3982/ECTA15272
p. 1599-1630

Yuichiro Kamada, Michihiro Kandori

This paper proposes a class of games called revision games. In a revision game, players start with initially prepared actions, followed by a sequence of random revision opportunities until a predetermined deadline. In the course of revisions, players monitor each other's behavior. It is shown that players can cooperate and that their behavior under the optimal equilibrium is described by a simple differential equation. We present the necessary and sufficient conditions for cooperation to be sustained in revision games. We also present applications to the preopening activities in the stock exchange and to an electoral campaign.



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