ParetoOptimal Nash Equilibria are
Competitive in a Repeated Economy
Mordecai Kurz and Sergiu Hart
Abstract
Consider a finite exchange economy first as a static, 1 period, economy
and then as a
repeated economy over T periods
when the utility of each agent is the mean utility over T.
A family of strategic games is defined via a set of six general properties
the most distinct of which is the ability of agents to move commodities
forward in time. Now consider Pareto optimal allocations in the T
period economy which are also Nash equilibria in this family of strategic
games. We prove that as T becomes large this set converges to the
set of competitive utility allocations in the one period economy. The key
idea is that a repetition of the economy when agents can move commodities
forward in time acts as a convexification of the set of individually feasible
outcomes for player i holding all other strategies fixed.
Journal of Economic Literature Classification Numbers:
021, 022.

Journal of Economic Theory 28 (1982), 2, 320346