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Infinitely repeated games with public monitoring and monetary transfers

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  • Goldlücke, Susanne
  • Kranz, Sebastian

Abstract

This paper studies infinitely repeated games with imperfect public monitoring and the possibility of monetary transfers. It is shown that all public perfect equilibrium payoffs can be implemented with a simple class of stationary equilibria that use stick-and-carrot punishments. A fast algorithm is developed that exactly computes the set of pure strategies equilibrium payoffs for all discount factors.

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Bibliographic Info

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

Volume (Year): 147 (2012)
Issue (Month): 3 ()
Pages: 1191-1221

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Handle: RePEc:eee:jetheo:v:147:y:2012:i:3:p:1191-1221

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

Related research

Keywords: Repeated games; Computational methods; Monetary transfers; Imperfect public monitoring;

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References

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  1. Mailath, George J. & Obara, Ichiro & Sekiguchi, Tadashi, 2002. "The Maximum Efficient Equilibrium Payoff in the Repeated Prisoners' Dilemma," Games and Economic Behavior, Elsevier, vol. 40(1), pages 99-122, July.
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  4. Abreu, Dilip & Pearce, David & Stacchetti, Ennio, 1990. "Toward a Theory of Discounted Repeated Games with Imperfect Monitoring," Econometrica, Econometric Society, vol. 58(5), pages 1041-63, September.
  5. Brian D. Wright & Kenneth M. Kletzer, 2000. "Sovereign Debt as Intertemporal Barter," American Economic Review, American Economic Association, vol. 90(3), pages 621-639, June.
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  7. Drew Fudenberg & David K. Levine & Eric Maskin, 1994. "The Folk Theorem with Imperfect Public Information," Levine's Working Paper Archive 394, David K. Levine.
  8. Jonathan Levin, 2003. "Relational Incentive Contracts," American Economic Review, American Economic Association, vol. 93(3), pages 835-857, June.
  9. William Fuchs, 2005. "Contracting with Repeated Moral Hazard and Private Evaluations," 2005 Meeting Papers 431, Society for Economic Dynamics.
  10. Abreu, Dilip, 1988. "On the Theory of Infinitely Repeated Games with Discounting," Econometrica, Econometric Society, vol. 56(2), pages 383-96, March.
  11. Jonathan Levin, 2002. "Multilateral Contracting And The Employment Relationship," The Quarterly Journal of Economics, MIT Press, vol. 117(3), pages 1075-1103, August.
  12. Joseph E. Harrington Jr. & Andrzej Skrzypacz, 2007. "Collusion under monitoring of sales," RAND Journal of Economics, RAND Corporation, vol. 38(2), pages 314-331, 06.
  13. Mailath, George J. & Samuelson, Larry, 2006. "Repeated Games and Reputations: Long-Run Relationships," OUP Catalogue, Oxford University Press, number 9780195300796.
  14. Tomas Gal & Josef Nedoma, 1972. "Multiparametric Linear Programming," Management Science, INFORMS, vol. 18(7), pages 406-422, March.
  15. Klimenko, Mikhail & Ramey, Garey & Watson, Joel, 2001. "Recurrent Trade Agreements and the Value of External Enforcement," University of California at San Diego, Economics Working Paper Series qt9xm2x5w7, Department of Economics, UC San Diego.
  16. Katherine Doornik, 2006. "Relational Contracting in Partnerships," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 15(2), pages 517-548, 06.
  17. Kranz, Sebastian & Ohlendorf, Susanne, 2009. "Renegotiation-Proof Relational Contracts with Side Payments," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 259, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  18. Abreu, Dilip & Dutta, Prajit K & Smith, Lones, 1994. "The Folk Theorem for Repeated Games: A NEU Condition," Econometrica, Econometric Society, vol. 62(4), pages 939-48, July.
  19. Atkeson, Andrew, 1991. "International Lending with Moral Hazard and Risk of Repudiation," Econometrica, Econometric Society, vol. 59(4), pages 1069-89, July.
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Citations

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Cited by:
  1. Goldlücke, Susanne & Kranz, Sebastian, 2012. "Delegation, monitoring, and relational contracts," Economics Letters, Elsevier, vol. 117(2), pages 405-407.
  2. Sebastian Kranz, 2013. "Relational Contracting, Repeated Negotiations, and Hold-Up," Levine's Working Paper Archive 786969000000000676, David K. Levine.
  3. Goldlücke, Susanne & Kranz, Sebastian, 2013. "Renegotiation-proof relational contracts," Games and Economic Behavior, Elsevier, vol. 80(C), pages 157-178.
  4. Kranz, Sebastian, 2013. "Relational Contracting, Repeated Negotiations, and Hold-Up," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 80047, Verein für Socialpolitik / German Economic Association.
  5. David A. Miller & Joel Watson, 2013. "A Theory of Disagreement in Repeated Games With Bargaining," Econometrica, Econometric Society, vol. 81(6), pages 2303-2350, November.
  6. Sebastian Kranz, 2012. "Discounted Stochastic Games with Voluntary Transfers," Cowles Foundation Discussion Papers 1847, Cowles Foundation for Research in Economics, Yale University.

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