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Efficiency in repeated games with local interaction and uncertain local monitoring

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  • Nava, Francesco

    ()
    (Economics Department, London School of Economics)

  • Piccione, Michele

    ()
    (Economics Department, London School of Economics)

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    Abstract

    The paper discusses community enforcement in infinitely repeated, two-action games with local interaction and uncertain monitoring. Each player interacts with and observes only a fixed set of opponents, of whom he is privately informed. The main result shows that when beliefs about the monitoring structure have full support, efficiency can be sustained with sequential equilibria that are independent of the players' beliefs. Stronger results are obtained when only acyclic monitoring structures are allowed or players have unit discount rates. These equilibria satisfy numerous robustness properties.

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    File URL: http://econtheory.org/ojs/index.php/te/article/viewFile/20140279/10218/319
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    Bibliographic Info

    Article provided by Econometric Society in its journal Theoretical Economics.

    Volume (Year): 9 (2014)
    Issue (Month): 1 (January)
    Pages:

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    Handle: RePEc:the:publsh:1200

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    Web page: http://econtheory.org

    Related research

    Keywords: Local monitoring; repeated games; cooperation; networks;

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    8. Itay Fainmesser, 2010. "Community Structure and Market Outcomes: A Repeated Games in Networks Approach," Working Papers 2010-14, Brown University, Department of Economics.
    9. Takahashi, Satoru, 2010. "Community enforcement when players observe partners' past play," Journal of Economic Theory, Elsevier, vol. 145(1), pages 42-62, January.
    10. Joyee Deb, 2008. "Cooperation and Community Responsibility: A Folk Theorem for Repeated Matching Games with Names," Working Papers 08-24, New York University, Leonard N. Stern School of Business, Department of Economics.
    11. Kandori, Michihiro, 1992. "Social Norms and Community Enforcement," Review of Economic Studies, Wiley Blackwell, vol. 59(1), pages 63-80, January.
    12. Cho, Myeonghwan, 2011. "Public randomization in the repeated prisoner's dilemma game with local interaction," Economics Letters, Elsevier, vol. 112(3), pages 280-282, September.
    13. David Miller & Nageeb Ali, 2008. "Cooperation and Collective Enforcement in Networked Societies," 2008 Meeting Papers 970, Society for Economic Dynamics.
    14. McBride, Michael, 2006. "Imperfect monitoring in communication networks," Journal of Economic Theory, Elsevier, vol. 126(1), pages 97-119, January.
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