Repeated games with differential time preferences

When players have identical time preferences, the set of feasible repeated game payoffs coincides with the convex hull of the underlying stage-game pa yoffs. Moreover, all feasible and individually rational payoffs can be sust ained by equilibria if the players are sufficiently patient. Neither of the se facts generalizes to the case of different time preferences. First, play ers can mutually benefit from trading payoffs across time. Hence, the set o f feasible repeated game payoffs is typically larger than the convex hull o f the underlying stage-game payoffs. Second, it is not usually the case tha t every trade plan that guarantees individually rational payoffs can be sus tained by an equilibrium, no matter how patient the players are. This paper provides a simple characterization of the sets of Nash and of subgame perf ect equilibrium payoffs in two-player repeated games.