This paper studies contagious equilibrium in infinitely repeated matching games. The innovation is to identify a key statistic of contagious punishment that, used together with a recursive formulation, generates tractable closed-form expressions for continuation payoffs, off equilibrium. This allows a transparent characterization of the dynamic incentives created by contagious punishment schemes.
Camera, Gabriele, and Alessandro Gioffré. "A tractable analysis of contagious equilibria." Journal of Mathematical Economics 50 (2014): 290-300. doi: 10.1016/j.jmateco.2013.07.003
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NOTICE: this is the author’s version of a work that was accepted for publication in Journal of Mathematical Economics. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Mathematical Economics, volume 50, in 2014. DOI: 10.1016/j.jmateco.2013.07.003
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