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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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Bibliographic Info

Paper provided by David K. Levine in its series Levine's Working Paper Archive with number 618897000000000030.

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Date of creation: 04 Jun 2004
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Handle: RePEc:cla:levarc:618897000000000030

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Web page: http://www.dklevine.com/

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References

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  1. Drew Fudenberg & David K. Levine & Eric Maskin, 1994. "The Folk Theorem with Imperfect Public Information," Levine's Working Paper Archive 394, David K. Levine.
  2. Michihiro Kandori, 2001. "Introduction to Repeated Games with Private Monitoring," CIRJE F-Series CIRJE-F-114, CIRJE, Faculty of Economics, University of Tokyo.
  3. 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.
  4. Jeffrey Ely, 2000. "A Robust Folk Theorem for the Prisoners' Dilemma," Econometric Society World Congress 2000 Contributed Papers 0210, Econometric Society.
  5. V. Bhaskar & Ichiro Obara, 2000. "Belief-Based Equilibria in the Repeated Prisoners' Dilemma with Private Monitoring," Econometric Society World Congress 2000 Contributed Papers 1330, Econometric Society.
  6. Michihiro Kandori & Hitoshi Matsushima, 1997. "Private observation and Communication and Collusion," Levine's Working Paper Archive 1256, David K. Levine.
  7. Aoyagi, Masaki, 2002. "Collusion in Dynamic Bertrand Oligopoly with Correlated Private Signals and Communication," Journal of Economic Theory, Elsevier, vol. 102(1), pages 229-248, January.
  8. George Mailath & Stephen Morris, . "Repeated Games with Almost-Public Monitoring," Penn CARESS Working Papers 6bf0f633ff55148107994e092, Penn Economics Department.
  9. Rich McLean & Ichiro Obara & Andrew Postlewaite, 2005. "Informational Smallness and Private Monitoring in Repeated Games," Levine's Bibliography 784828000000000261, UCLA Department of Economics.
  10. Matsushima, Hitoshi, 1991. "On the theory of repeated games with private information : Part II: revelation through communication," Economics Letters, Elsevier, vol. 35(3), pages 257-261, March.
  11. Myerson, Roger B, 1986. "Multistage Games with Communication," Econometrica, Econometric Society, Econometric Society, vol. 54(2), pages 323-58, March.
  12. Forges, Francoise M, 1986. "An Approach to Communication Equilibria," Econometrica, Econometric Society, Econometric Society, vol. 54(6), pages 1375-85, November.
  13. Ben-Porath, Elchanan & Kahneman, Michael, 1996. "Communication in Repeated Games with Private Monitoring," Journal of Economic Theory, Elsevier, vol. 70(2), pages 281-297, August.
  14. Michihiro Kandori & Hitoshi Matsushima, 1998. "Private Observation, Communication and Collusion," Econometrica, Econometric Society, Econometric Society, vol. 66(3), pages 627-652, May.
  15. Sekiguchi, Tadashi, 1997. "Efficiency in Repeated Prisoner's Dilemma with Private Monitoring," Journal of Economic Theory, Elsevier, vol. 76(2), pages 345-361, October.
  16. Piccione, Michele, 2002. "The Repeated Prisoner's Dilemma with Imperfect Private Monitoring," Journal of Economic Theory, Elsevier, vol. 102(1), pages 70-83, January.
  17. Olivier Compte, 1998. "Communication in Repeated Games with Imperfect Private Monitoring," Econometrica, Econometric Society, Econometric Society, vol. 66(3), pages 597-626, May.
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Citations

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Cited by:
  1. Fong, Kyna & Sannikov, Yuliy, 2007. "Efficiency in a Repeated Prisoners' Dilemma with Imperfect Private Monitoring," Department of Economics, Working Paper Series, Department of Economics, Institute for Business and Economic Research, UC Berkeley qt8vz4q9tr, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  2. Rich McLean & Ichiro Obara & Andrew Postlewaite, 2005. "Informational Smallness and Private Monitoring in Repeated Games," Levine's Bibliography 784828000000000261, UCLA Department of Economics.
  3. Yamamoto, Yuichi, 2012. "Characterizing belief-free review-strategy equilibrium payoffs under conditional independence," Journal of Economic Theory, Elsevier, vol. 147(5), pages 1998-2027.
  4. George J. Mailath & Stephen Morris, 2005. "Coordination Failure in Repeated Games with Almost-Public Monitoring," Levine's Bibliography 122247000000000340, UCLA Department of Economics.
  5. Roman, Mihai Daniel, 2010. "A game theoretic approach of war with financial influences," MPRA Paper 38389, University Library of Munich, Germany.
  6. Fudenberg, Drew & Ishii, Yuhta & Kominers, Scott Duke, 2014. "Delayed-response strategies in repeated games with observation lags," Scholarly Articles 11880354, Harvard University Department of Economics.
  7. Yamamoto, Yuichi, 2009. "A limit characterization of belief-free equilibrium payoffs in repeated games," Journal of Economic Theory, Elsevier, vol. 144(2), pages 802-824, March.
  8. Takizawa, Shinichiro, 2010. "Private monitoring games and decisions under uncertainty," Economics Letters, Elsevier, vol. 108(3), pages 337-340, September.
  9. Richard McLean & Ichiro Obara & Andrew Postlewaite, 2005. "Informational Smallness and Privae Momnitoring in Repeated Games, Second Version," PIER Working Paper Archive 11-029, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 10 Feb 2011.
  10. Ichiro Obara, 2005. "Folk Theorem with Communication," UCLA Economics Online Papers 366, UCLA Department of Economics.
  11. Raduna, Daniela Viviana & Roman, Mihai Daniel, 2011. "Risk aversion influence on insurance market," MPRA Paper 37725, University Library of Munich, Germany, revised 01 Feb 2012.
  12. Ichiro Obara, 2005. "Informational Smallness and Private Monitoring in Repeated Games (with R. McLean and A. Postlewaite)," UCLA Economics Online Papers 365, UCLA Department of Economics.
  13. Roman, Mihai Daniel, 2008. "Entreprises behavior in cooperative and punishment‘s repeated negotiations," MPRA Paper 37527, University Library of Munich, Germany, revised 05 Jan 2009.

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