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Communication and cooperation in repeated games

Author

Listed:
  • Awaya, Yu

    (Department of Economics, University of Rochester)

  • Krishna, Vijay

    (Department of Economics, Pennsylvania State University)

Abstract

We study the role of communication in repeated games with private monitoring. We first show that without communication, the set of Nash equilibrium payoffs in such games is a subset of the set of ε-coarse correlated equilibrium payoffs (ε-CCE) of the underlying one-shot game. The value of ε depends on the discount factor and the quality of monitoring. We then identify conditions under which there are equilibria with "cheap talk" that result in nearly efficient payoffs outside the set ε-CCE. Thus, in our model, communication is necessary for cooperation.

Suggested Citation

  • Awaya, Yu & Krishna, Vijay, 2019. "Communication and cooperation in repeated games," Theoretical Economics, Econometric Society, vol. 14(2), May.
    • Handle: RePEc:the:publsh:3049
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    References listed on IDEAS

    as
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    Cited by:

    1. David Spector, 2022. "Cheap Talk, Monitoring and Collusion," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 60(2), pages 193-216, March.
    2. Chan, Jimmy & Zhang, Wenzhang, 2023. "Self-evident events and the value of linking," Journal of Economic Theory, Elsevier, vol. 212(C).
    3. Takuo Sugaya & Alexander Wolitzky, 2023. "Monitoring versus Discounting in Repeated Games," Econometrica, Econometric Society, vol. 91(5), pages 1727-1761, September.
    4. Trivikram Dokka & Hervé Moulin & Indrajit Ray & Sonali SenGupta, 2023. "Equilibrium design in an n-player quadratic game," Review of Economic Design, Springer;Society for Economic Design, vol. 27(2), pages 419-438, June.
    5. Yu Awaya & Vijay Krishna, 2020. "Information exchange in cartels," RAND Journal of Economics, RAND Corporation, vol. 51(2), pages 421-446, June.
    6. Konstantinos Georgalos & Indrajit Ray & Sonali SenGupta, 2020. "Nash versus coarse correlation," Experimental Economics, Springer;Economic Science Association, vol. 23(4), pages 1178-1204, December.
    7. Grant, Simon & Stauber, Ronald, 2022. "Delegation and ambiguity in correlated equilibrium," Games and Economic Behavior, Elsevier, vol. 132(C), pages 487-509.
    8. David Spector, 2022. "Cheap Talk, Monitoring and Collusion," PSE-Ecole d'économie de Paris (Postprint) halshs-03760756, HAL.
    9. Trivikram Dokka Venkata Satyanaraya & Herve Moulin & Indrajit Ray & Sonali Sen Gupta, 2019. "Improving Abatement Levels and Welfare by Coarse Correlation in an Environmental Game," Working Papers 266042710, Lancaster University Management School, Economics Department.
    10. Aaron Barkley & David P. Byrne & Xiaosong Wu, 2022. "Price effects of calling out market power: A study of the COVID‐19 oil price shock," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 31(4), pages 923-941, November.
    11. Yu Awaya, 2021. "Private Monitoring and Communication in the Repeated Prisoner’s Dilemma," Games, MDPI, vol. 12(4), pages 1-10, October.
    12. David Spector, 2022. "Cheap Talk, Monitoring and Collusion," Post-Print halshs-03760756, HAL.
    13. Trivikram Dokka Venkata Satyanaraya & Herve Moulin & Indrajit Ray & Sonali Sen Gupta, 2020. "Equilibrium Design by Coarse Correlation in Quadratic Games," Working Papers 301895429, Lancaster University Management School, Economics Department.

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    More about this item

    Keywords

    Repeated games; private monitoring; communication;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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