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Collusive behaviour in finite repeated games with bonding

Eswaran, Mukesh and Lewis, Tracy (1986) Collusive behaviour in finite repeated games with bonding. Economics Letters, 20 (3). pp. 213-216. ISSN 0165-1765. doi:10.1016/0165-1765(86)90025-X.

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In finite repeated games, it is not possible to enforce collusive behaviour using deterrent strategies if the state game has a unique Nash equilibrium, because of the ‘unravelling’ of cooperative behaviour in the last period. This paper demonstrates that under certain conditions, some cooperation among the players can be maintained if they can post a bond which they must forfeit if they defect from the cooperative mode. We show that the incentives to cooperate increase as the period of interaction grows in that the size of the bonds required to deter defection become arbitrarily small as the number of periods in the game increases.

Item Type:Article
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URLURL TypeDescription ItemEarlier version published as Social Science Working Paper 466
Additional Information:Copyright © 1986 Published by Elsevier B.V. Received 28 August 1985, Available online 5 March 2002.
Issue or Number:3
Record Number:CaltechAUTHORS:20170925-110047287
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:81810
Deposited By: Katherine Johnson
Deposited On:25 Sep 2017 18:08
Last Modified:15 Nov 2021 19:46

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