We describe a sequent calculus μLJ with primitives for inductive andcoinductive datatypes and equip it with reduction rules allowing a sound translation ofGödel’s system T. We introduce the notion of a μ-closedcategory, relying on a uniform interpretation of open μLJformulas as strong functors. We show that any μ-closed category is asound model for μLJ. We then turn to the construction of a concreteμ-closed category based on Hyland-Ong game semantics. The model relieson three main ingredients: the construction of a general class of strong functors calledopen functors acting on the category of games and strategies, thesolution of recursive arena equations by exploiting cycles in arenas, andthe adaptation of the winning conditions of parity games to build initial algebras andterminal coalgebras for many open functors. We also prove a weak completeness result forthis model, yielding a normalisation proof for μLJ.

For an arbitrary category, we consider the least class of functors containing the projections and closed under finite products, finite coproducts, parameterized initial algebras and parameterized final coalgebras, i.e. the class of functors that are definable by μ-terms. We call the category μ-bicomplete if every μ-term defines a functor. We provide concrete examples of such categories and explicitly characterize this class of functors for the category of sets and functions. This goal is achieved through parity games: we associate to each game an algebraic expression and turn the game into a term of a categorical theory. We show that μ-terms and parity games are equivalent, meaning that they define the same property of being μ-bicomplete. Finally, the interpretation of a parity game in the category of sets is shown to be the set of deterministic winning strategies for a chosen player.