COWLES FOUNDATION FOR RESEARCH IN
ECONOMICS Box 208281
COWLES FOUNDATION DISCUSSION PAPER NO. 1847 Discounted Stochastic Games with Voluntary Transfers Sebastian Kranz January 2012 This paper studies discounted stochastic games perfect or imperfect
public monitoring and the opportunity to conduct voluntary monetary transfers. We show
that for all discount factors every public perfect equilibrium payoff can be implemented
with a simple class of equilibria that have a stationary structure on the equilibrium path
and optimal penal codes with a stick and carrot structure. We develop algorithms that
exactly compute or approximate the set of equilibrium payoffs and find simple equilibria
that implement these payoffs. |
