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Delayed-Response Strategies in Repeated Games with Observation Lags

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  • Drew Fudenberg
  • Yuhta Ishii
  • Scott Duke Kominers

Abstract

We extend the folk theorem of repeated games to two settings in which players' information about others' play arrives with stochastic lags. In our first model, signals are almost-perfect if and when they do arrive, that is, each player either observes an almost-perfect signal of period-t play with some lag or else never sees a signal of period-t play. The second model has the same lag structure, but the information structure corresponds to a lagged form of imperfect public monitoring, and players are allowed to communicate via cheap-talk messages at the end of each period. In each case, we construct equilibria in “delayed-response strategies,” which ensure that players wait long enough to respond to signals that with high probability all relevant signals are received before players respond. To do so, we extend past work on private monitoring to obtain folk theorems despite the small residual amount of private information.

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Paper provided by David K. Levine in its series Levine's Working Paper Archive with number 786969000000000390.

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Date of creation: 02 Mar 2012
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Handle: RePEc:cla:levarc:786969000000000390

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Cited by:
  1. Osório Costa, Antonio Miguel, 2012. "The Limits of Discrete Time Repeated Games:Some Notes and Comments," Working Papers 2072/203171, Universitat Rovira i Virgili, Department of Economics.

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