In this paper we propose a model to describe the effectiveness of coordination in a continuously repeated two-player game. We study how the choice of a decision rule by a coordinator affects the strategic behavior of the players, resulting in more or less cooperation. Our model requires the analysis of an infinite-horizon nonlinear differential game with a one-dimensional state space, and we propose a method to obtain numerically the stationary feedback Nash equilibria for such games. This method is based on solving the associated Hamilton-Jacobi-Bellman-Isaacs equations directly.
|Number of pages||28|
|Publication status||Published - 1995|
|Name||Discussion Papers / CentER for Economic Research|
- Repeated Games
- game theory