EXISTENCE AND LOCAL STABILITY OF PARETO SUPERIOR REACTION FUNCTION EQUILIBRIA IN DISCOUNTED SUPERGAMES

The existence of locally asymptotically stable subgame perfect reactio n function equilibria (RFE) is demonstrated for a general class of n-p layer discounted supergames. Benefit denial, a fundamental identity of all subgame perfect equilibria defined on a convex range, is introduc ed and is the key to the equilibrium existence proof.