Subgame Perfect Correlated Equilibria in Repeated Games

This paper investigates discounted inÖnitely repeated games with observable actions extended with an extensive form correlation device. Such games model situations of repeated interaction of many players who choose their individual actions conditional on both public and private information. A number of characterizations of the set of subgame perfect correlated equilibrium payo§s are obtained with the help of a recursive methodology similar to that developed Abreu, Pearce, and Stacchetti (1986, 1990). Notwithstanding the convexity of the set of stage game correlated equilibrium payo§s, we show that the set of subgame perfect correlated equilibrium payo§s need not be convex and may strictly include the set of subgame perfect public randomization equilibrium payo§s.