Perfect Sequential Reciprocity and Dynamic Consistency

MPRA Paper from University Library of Munich, Germany

Abstract: Dufwenberg and Kirchsteiger�s (2004) extends Rabin�s (1993) theory of reciprocity in a dynamic sense, introducing a rule of revision for player�s beliefs. The Sequential Reciprocity Equilibrium [SRE] they define can be dynamically inconsistent. In this article it is argued that such dynamic inconsistency is not intrinsically related to issues of reciprocity, but rather to the particular way the beliefs�updating process is modeled. A refinement of the SRE, which is both dynamically consistent and, it is argued, more sound to assumptions usually made in the literature of information economics and philosophy, is proposed.

Keywords: Reciprocity; � Dynamic Consistency (search for similar items in EconPapers)
JEL-codes: C72 C73 D64 D83 (search for similar items in EconPapers)
Date: 2004-06, Revised 2007-09
New Economics Papers: this item is included in nep-evo and nep-gth
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:10261

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