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The Nash-threats folk theorem with communication and approximate common knowledge in two player games

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  • Fudenberg, Drew
  • Levine, David K.

Abstract

We show that the use of communications to coordinate equilibria generates a Nash-threats folk theorem in two-player games with “almost public†information. The results generalize to the n -person case. However, the two-person case is more difficult because it is not possible to sustain equilibria by comparing the reports of different players, and using these “third parties†to effectively enforce contracts.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 132 (2007)
Issue (Month): 1 (January)
Pages: 461-473

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Handle: RePEc:eee:jetheo:v:132:y:2007:i:1:p:461-473

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Web page: http://www.elsevier.com/locate/inca/622869

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References

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  1. Aoyagi, Masaki, 2002. "Collusion in Dynamic Bertrand Oligopoly with Correlated Private Signals and Communication," Journal of Economic Theory, Elsevier, vol. 102(1), pages 229-248, January.
  2. George J. Mailath & Stephen Morris, 1999. "Repeated Games with Almost-Public Monitoring," Cowles Foundation Discussion Papers 1236, Cowles Foundation for Research in Economics, Yale University.
  3. Olivier Compte, 1998. "Communication in Repeated Games with Imperfect Private Monitoring," Econometrica, Econometric Society, vol. 66(3), pages 597-626, May.
  4. Edward J Green & Robert H Porter, 1997. "Noncooperative Collusion Under Imperfect Price Information," Levine's Working Paper Archive 1147, David K. Levine.
  5. Forges, Francoise M, 1986. "An Approach to Communication Equilibria," Econometrica, Econometric Society, vol. 54(6), pages 1375-85, November.
  6. Ben-Porath, Elchanan & Kahneman, Michael, 1996. "Communication in Repeated Games with Private Monitoring," Journal of Economic Theory, Elsevier, vol. 70(2), pages 281-297, August.
  7. Piccione, Michele, 2002. "The Repeated Prisoner's Dilemma with Imperfect Private Monitoring," Journal of Economic Theory, Elsevier, vol. 102(1), pages 70-83, January.
  8. Jeffrey C. Ely & Juuso Valimaki, 1999. "A Robust Folk Theorem for the Prisoner's Dilemma," Discussion Papers 1264, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  9. Fudenberg, Drew & Levine, David I & Maskin, Eric, 1994. "The Folk Theorem with Imperfect Public Information," Econometrica, Econometric Society, vol. 62(5), pages 997-1039, September.
  10. V. Bhaskar & Ichiro Obara, . "Belief-Based Equilibria in the Repeated Prisoners' Dilemma with Private Monitoring," Penn CARESS Working Papers d93eb6f40c65728f9e1a7b114, Penn Economics Department.
  11. Rich McLean & Ichiro Obara & Andrew Postlewaite, 2005. "Informational Smallness and Private Monitoring in Repeated Games," Levine's Bibliography 784828000000000261, UCLA Department of Economics.
  12. Michihiro Kandori, 2001. "Introduction to Repeated Games with Private Monitoring," CIRJE F-Series CIRJE-F-114, CIRJE, Faculty of Economics, University of Tokyo.
  13. Michihiro Kandori & Hitoshi Matsushima, 1998. "Private Observation, Communication and Collusion," Econometrica, Econometric Society, vol. 66(3), pages 627-652, May.
  14. Matsushima, Hitoshi, 1991. "On the theory of repeated games with private information : Part II: revelation through communication," Economics Letters, Elsevier, vol. 35(3), pages 257-261, March.
  15. Myerson, Roger B, 1986. "Multistage Games with Communication," Econometrica, Econometric Society, vol. 54(2), pages 323-58, March.
  16. Sekiguchi, Tadashi, 1997. "Efficiency in Repeated Prisoner's Dilemma with Private Monitoring," Journal of Economic Theory, Elsevier, vol. 76(2), pages 345-361, October.
  17. Michihiro Kandori & Hitoshi Matsushima, 1997. "Private observation and Communication and Collusion," Levine's Working Paper Archive 1256, David K. Levine.
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Citations

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Cited by:
  1. Raduna, Daniela Viviana & Roman, Mihai Daniel, 2011. "Risk aversion influence on insurance market," MPRA Paper 37725, University Library of Munich, Germany, revised 01 Feb 2012.
  2. George J Mailath & Stephen Morris, 2006. "Coordination Failure in Repeated Games with Almost-Public Monitoring," Levine's Bibliography 122247000000001105, UCLA Department of Economics.
  3. Obara, Ichiro, 2009. "Folk theorem with communication," Journal of Economic Theory, Elsevier, vol. 144(1), pages 120-134, January.
  4. Roman, Mihai Daniel, 2008. "Entreprises behavior in cooperative and punishment‘s repeated negotiations," MPRA Paper 37527, University Library of Munich, Germany, revised 05 Jan 2009.
  5. Richard McLean & Ichiro Obara & Andrew Postlewaite, 2001. "Informational Smallness and Private Monitoring in Repeated Games," PIER Working Paper Archive 05-024, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 20 Jul 2005.
  6. Yamamoto, Yuichi, 2009. "A limit characterization of belief-free equilibrium payoffs in repeated games," Journal of Economic Theory, Elsevier, vol. 144(2), pages 802-824, March.
  7. Fudenberg, Drew & Ishii, Yuhta & Kominers, Scott Duke, 2014. "Delayed-response strategies in repeated games with observation lags," Scholarly Articles 11880354, Harvard University Department of Economics.
  8. Fong, Kyna & Sannikov, Yuliy, 2007. "Efficiency in a Repeated Prisoners' Dilemma with Imperfect Private Monitoring," Department of Economics, Working Paper Series qt8vz4q9tr, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  9. Ichiro Obara, 2005. "Informational Smallness and Private Monitoring in Repeated Games (with R. McLean and A. Postlewaite)," UCLA Economics Online Papers 365, UCLA Department of Economics.
  10. Roman, Mihai Daniel, 2010. "A game theoretic approach of war with financial influences," MPRA Paper 38389, University Library of Munich, Germany.
  11. Richard McLean & Ichiro Obara & Andrew Postlewaite, 2005. "Informational Smallness and Privae Momnitoring in Repeated Games, Second Version," PIER Working Paper Archive 11-029, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 10 Feb 2011.
  12. Takizawa, Shinichiro, 2010. "Private monitoring games and decisions under uncertainty," Economics Letters, Elsevier, vol. 108(3), pages 337-340, September.
  13. Yamamoto, Yuichi, 2012. "Characterizing belief-free review-strategy equilibrium payoffs under conditional independence," Journal of Economic Theory, Elsevier, vol. 147(5), pages 1998-2027.

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