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Efficiency in Repeated Games Revisited: The Role of Private Strategies

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  • Michihiro Kandori

    (Department of Economics)

  • Ichiro Obara

    (University of Tokyo)

Abstract

Most theoretical or applied research on repeated games with imperfect monitoring has focused on public strategies: strategies that depend solely on the history of publicly observable signals. This paper sheds light on the role of private strategies: strategies that depend not only on public signals, but also on players' own actions in the past. Our main finding is that players can sometimes make better use of information by using private strategies and that efficiency in repeated games can be improved. Our equilibrium private strategy for repeated prisoners' dilemma games consists of two states and has the property that each player's optimal strategy is independent of the other player's state. Copyright The Econometric Society 2006.

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Bibliographic Info

Paper provided by UCLA Department of Economics in its series UCLA Economics Working Papers with number 826.

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Date of creation: 01 Jan 2003
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Handle: RePEc:cla:uclawp:826

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Web page: http://www.econ.ucla.edu/

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  1. David G. Pearce & Dilip Abreu & Paul R. Milgrom, 1988. "Information and Timing in Repeated Partnerships," Cowles Foundation Discussion Papers 875, Cowles Foundation for Research in Economics, Yale University.
  2. George J. Mailath & Stephen Morris, 2000. "Repeated Games with Almost-Public Monitoring," Econometric Society World Congress 2000 Contributed Papers 0661, Econometric Society.
  3. Ichiro Obara, 2007. "The Full Surplus Extraction Theorem with Hidden Actions," Levine's Bibliography 843644000000000137, UCLA Department of Economics.
  4. Michihiro Kandori, 2001. "Introduction to Repeated Games with Private Monitoring," CIRJE F-Series CIRJE-F-114, CIRJE, Faculty of Economics, University of Tokyo.
  5. Radner, Roy & Myerson, Roger & Maskin, Eric, 1986. "An Example of a Repeated Partnership Game with Discounting and with Uniformly Inefficient Equilibria," Review of Economic Studies, Wiley Blackwell, vol. 53(1), pages 59-69, January.
  6. Jeffrey C. Ely & Juuso Valimaki, 1999. "A Robust Folk Theorem for the Prisoner's Dilemma," Discussion Papers 1264, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  7. Michihiro Kandori & Ichiro Obara, 2004. "Endogeous Monitoring," 2004 Meeting Papers 752, Society for Economic Dynamics.
  8. 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.
  9. Ehud Lehrer, 1988. "Internal Correlation in Repeated Games," Discussion Papers 800, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  10. George J. Mailath & Steven A. Matthews & Tadashi Sekiguchi, 2001. "Private Strategies in Finitely Repeated Games with Imperfect Public Monitoring," Penn CARESS Working Papers e7304519c6d1562163dbaf181, Penn Economics Department.
  11. Drew Fudenberg & David K. Levine & Eric Maskin, 1994. "The Folk Theorem with Imperfect Public Information," Levine's Working Paper Archive 394, David K. Levine.
  12. Piccione, Michele, 2002. "The Repeated Prisoner's Dilemma with Imperfect Private Monitoring," Journal of Economic Theory, Elsevier, vol. 102(1), pages 70-83, January.
  13. Ichiro Obara, 2000. "Private Strategy and Efficiency: Repeated Partnership Games Revisited," Econometric Society World Congress 2000 Contributed Papers 1449, Econometric Society.
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