Efficiency and Observability with Long-Run and Short-Run Players
AbstractWe present a general algorithm for computing the limit, as ÃÂ´ Ã¢â â 1, of the set of payoffs of perfect public equilibria of repeated games with long-run and short-run players, allowing for the possibility that the playersÃ¢â¬Â² actions are not observable by their opponents. We illustrate the algorithm with two economic examples. In a simple partnership we show how to compute the equilibrium payoffs when the folk theorem fails. In an investment game, we show that two competing capitalists subject to moral hazard may both become worse off if their firms are merged and they split the profits from the merger. Finally, we show that with short-run players each long-run playerÃ¢â¬Â²s highest equilibrium payoff is generally greater when their realized actions are observed.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Economic Theory.
Volume (Year): 62 (1994)
Issue (Month): 1 (February)
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Web page: http://www.elsevier.com/locate/inca/622869
Other versions of this item:
- Drew Fudenberg & David K Levine, 1999. "Efficiency and Observability with Long-Run and Short-Run Players," Levine's Working Paper Archive 81, David K. Levine.
- Levine, David & Fudenberg, Drew, 1994. "Efficiency and Observability with Long-Run and Short-Run Players," Scholarly Articles 3203774, Harvard University Department of Economics.
- D. Fudenberg & D. K. Levine, 1994. "Efficiency and Observability with Long-Run and Short-Run Players," Levine's Working Paper Archive 627, David K. Levine.
- Fudenberg, D. & Levine, D.K., 1991. "Efficiency and Obsevability with Long-Run and Short-Run Players," Working papers 591, Massachusetts Institute of Technology (MIT), Department of Economics.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Edward J Green & Robert H Porter, 1997.
"Noncooperative Collusion Under Imperfect Price Information,"
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1147, David K. Levine.
- Green, Edward J & Porter, Robert H, 1984. "Noncooperative Collusion under Imperfect Price Information," Econometrica, Econometric Society, vol. 52(1), pages 87-100, January.
- Green, Edward J. & Porter, Robert H., 1982. "Noncooperative Collusion Under Imperfect Price Information," Working Papers 367, California Institute of Technology, Division of the Humanities and Social Sciences.
- Gary Hansen, 2010.
"Indivisible Labor and the Business Cycle,"
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233, David K. Levine.
- Fudenberg, Drew & Maskin, Eric, 1986. "The Folk Theorem in Repeated Games with Discounting or with Incomplete Information," Econometrica, Econometric Society, vol. 54(3), pages 533-54, May.
- Kreps, David M. & Wilson, Robert, 1982.
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Elsevier, vol. 27(2), pages 253-279, August.
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