Social security as Markov equilibrium in OLG models

Non-Markov subgame perfect equilibria assume agents know all the past history of the game; they cannot predict when the social security system will emerge and whether or not it will eventually emerge; they prescribe that generations that never deviated may be punished. Markov equilibria, placing more restrictions on the structure of the game, are able to deliver solutions that do not suffer from these drawbacks. As the paper shows, however, Markov strategies may produce unstable dynamics.