Folk Theorem (game Theory)

Folk Theorem (game Theory)

In game theory, folk theorems are a class of theorems which imply that in repeated games, any outcome is a feasible solution concept, if under that outcome the players' minimax conditions are satisfied. The minimax condition states that a player will minimize the maximum possible loss which he could face in the game. An outcome is said to be feasible if it satisfies this condition for each player of the game. A repeated game is one in which there is not necessarily a final move, but rather, there is a sequence of rounds, during which the player may gather information and choose moves. An early published example is (Friedman 1971).

In mathematics, the term folk theorem refers generally to any theorem that is believed and discussed, but has not been published. In order that the name of the theorem be more descriptive, Roger Myerson has recommended the phrase general feasibility theorem in the place of folk theorem for describing theorems which are of this class.