Introduction The purpose of this lecture is to help you familiarize with the workings of sequential equi- librium and\sequential equilibrium lite\, i.e. perfect Bayesian equilibrium The main focus is the \reputation\result of Kreps and Wilson(1982). You should refer to OR for details and definitions: I am following the textbook quite closely We have already mentioned the Entry Deterrence game. Now consider a K-fold repetition

Recall the following definitions: in any model M=(Q, (Ti, ai, piie), Ri is the event Player i is rational\;R=nieN Ri. Also, Bi(E) is the event \Player i is certain that E is true\ and B(E)=neN Bi(E). This is as in Lecture

Extend Proposition 151.1 (the Perfect Folk Theorem with discounting) to arbitrary mixtures of payoff profiles of the original game G =(, (A Ui) ) Allow for both rational and real weights on the set of profiles {u(a): a E A}; note that the statement of the result will involve an approximation of the payoff profile

From or:226.1.227.1.229.1.237.1.243.1 For 243.1, also prove that the reputational equilibrium is sequential

By and large, I will follow OR, Chap. 8, so I will keep these notes to a minimum. ] The theory of repeated games is a double-edged sword. On one hand, it indicates how payoff profiles that are not consistent with Nash equilibrium in a simultaneous-move game might be achieved when the latter is played repeatedly, in a manner consistent with Nash or even subgame-perfect equilibrium