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The Nash Threats Folk Theorem With Communication and Approximate Common Knowledge in Two Player Games

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  • Drew Fudenberg
  • David K Levine

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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Suggested Citation

  • Drew Fudenberg & David K Levine, 2004. "The Nash Threats Folk Theorem With Communication and Approximate Common Knowledge in Two Player Games," Levine's Working Paper Archive 618897000000000030, David K. Levine.
    • Handle: RePEc:cla:levarc:618897000000000030
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    References listed on IDEAS

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    1. 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.
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    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General

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