Folk theorems for the observable implications of repeated games

The fact that infinitely repeated games have many different equilibrium outcomes is known as the Folk Theorem. Previous versions of the Folk Theorem have characterized only the payoffs of the game. This paper shows that over a finite portion of an infinitely repeated game, the concept of perfect equilibrium imposes virtually no restrictions on observable behavior. The Prisoner's Dilemma is presented as an example and discussed in detail.I would like to thank an anonymous referee, Sushil Bikhchandani, David Hirshleifer, David Levine, Thomas Voss, and participants in the UCLA Game Theory Seminar for helpful comments.