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Social Learning in Recurring Games

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  • Jackson, Matthew O.
  • Kalai, Ehud

Abstract

In a recurring game, a stage game is played sequentially by different groups of players. Each group receives publicly available information about the play of earlier groups. Players begin with initial uncertainty about the distribution of types (representing the preferences and strategic behavior) of players in the population. Later groups of players are able to learn from the history of play of earlier groups. We first study the evolution of beliefs in this uncertain recurring setting and then study how the structure of uncertainty and information determine the eventual convergence of play. We show that beliefs converge over time and, moreover, that the limit beliefs are empirically correct: their forecast of future public information matches the true distribution of future public information. Next, we provide sufficient conditions to ensure that the play of any stage game is eventually close to that of a Bayesian equilibrium where players know the true type generating distribution. We go further to identify conditions under which play converges to the play of a trembling-hand perfect (Bayesian) equilibrium.

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Bibliographic Info

Article provided by Elsevier in its journal Games and Economic Behavior.

Volume (Year): 21 (1997)
Issue (Month): 1-2 (October)
Pages: 102-134

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Handle: RePEc:eee:gamebe:v:21:y:1997:i:1-2:p:102-134

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Web page: http://www.elsevier.com/locate/inca/622836

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References

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  1. Lehrer, E, 1989. "Lower Equilibrium Payoffs in Two-Player Repeated Games with Non-observable Actions," International Journal of Game Theory, Springer, vol. 18(1), pages 57-89.
  2. Ehud Kalai & Ehud Lehrer, 1990. "Rational Learning Leads to Nash Equilibrium," Discussion Papers 925, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  3. Bikhchandani, Sushil & Hirshleifer, David & Welch, Ivo, 1992. "A Theory of Fads, Fashion, Custom, and Cultural Change in Informational Cascades," Journal of Political Economy, University of Chicago Press, vol. 100(5), pages 992-1026, October.
  4. Drew Fudenberg & David K. Levine, 1993. "Steady State Learning and Nash Equilibrium," Levine's Working Paper Archive 373, David K. Levine.
  5. Abreu, Dilip & Pearce, David & Stacchetti, Ennio, 1986. "Optimal cartel equilibria with imperfect monitoring," Journal of Economic Theory, Elsevier, vol. 39(1), pages 251-269, June.
  6. Fudenberg, Drew & Tirole, Jean, 1991. "Perfect Bayesian equilibrium and sequential equilibrium," Journal of Economic Theory, Elsevier, vol. 53(2), pages 236-260, April.
  7. Kandori, M. & Mailath, G.J., 1991. "Learning, Mutation, And Long Run Equilibria In Games," Papers 71, Princeton, Woodrow Wilson School - John M. Olin Program.
  8. Fudenberg, Drew & Levine, David K, 1993. "Self-Confirming Equilibrium," Econometrica, Econometric Society, vol. 61(3), pages 523-45, May.
  9. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
  10. Ehud Kalai & Ehud Lehrer, 1992. "Weak and Strong Merging of Opinions," Discussion Papers 983, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  11. David Kreps & Paul Milgrom & John Roberts & Bob Wilson, 2010. "Rational Cooperation in the Finitely Repeated Prisoners' Dilemma," Levine's Working Paper Archive 239, David K. Levine.
  12. Kalai, Ehud & Lehrer, Ehud, 1993. "Subjective Equilibrium in Repeated Games," Econometrica, Econometric Society, vol. 61(5), pages 1231-40, September.
  13. Banerjee, Abhijit V, 1992. "A Simple Model of Herd Behavior," The Quarterly Journal of Economics, MIT Press, vol. 107(3), pages 797-817, August.
  14. Lehrer, Ehud & Smorodinsky, Rann, 1997. "Repeated Large Games with Incomplete Information," Games and Economic Behavior, Elsevier, vol. 18(1), pages 116-134, January.
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