The Folk Theorem for Repeated Games: A Neu Condition, Abreu, Dutta, and Smith (Econometrica, 1994)

Folk theorems assert that any feasible and individually rational payoff vector of the stage game is a (subgame perfect) equilibrium payoff in the associated infinitely repeated game with little or no discounting. Fudenberg and Maskin (1986) establish a result for discounted repeated games as the discount factor goes to 1. For three or more players they rely on a full dimensionality condition, that the set of feasible payoff vectors of the stage game have dimension equal to the number of players. We replace this with the simple condition that no pair of players have equivalent utility functions is sufficient. This nonequivalent utilities (NEU) condition is weaker than full dimensionality, and is also often necessary.