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WHEN AND HOW THE PUNISHMENT MUST FIT THE CRIME
Author(s) -
Mailath George J.,
Nocke Volker,
White Lucy
Publication year - 2017
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/iere.12219
Subject(s) - subgame perfect equilibrium , mathematical economics , continuation , outcome (game theory) , punishment (psychology) , property (philosophy) , characterization (materials science) , set (abstract data type) , identity (music) , simple (philosophy) , repeated game , economics , econometrics , mathematics , computer science , game theory , psychology , social psychology , epistemology , philosophy , materials science , physics , acoustics , programming language , nanotechnology
In repeated normal‐form (simultaneous‐move) games, simple penal codes (Abreu, Journal of Economic Theory 39(1) (1986), 191–225; and Econometrica 56(2) (1988), 383–96) permit an elegant characterization of the set of subgame‐perfect outcomes. We show that in repeated extensive ‐form games such a characterization no longer obtains. By means of examples, we identify two types of settings in which a subgame‐perfect outcome may be supported only by a profile with the property that the continuation play after a deviation is tailored not only to the identity of the deviator but also to the nature of the deviation.