Efficiency and Observability with Long-Run and Short-Run Players
AbstractWe present a general algorithm for computing the limit, as Î´ â†’ 1, of the set of payoffs of perfect public equilibria of repeated games with long-run and short-run players, allowing for the possibility that the playersâ€² actions are not observable by their opponents. We illustrate the algorithm with two economic examples. In a simple partnership we show how to compute the equilibrium payoffs when the folk theorem fails. In an investment game, we show that two competing capitalists subject to moral hazard may both become worse off if their firms are merged and they split the profits from the merger. Finally, we show that with short-run players each long-run playerâ€²s highest equilibrium payoff is generally greater when their realized actions are observed.
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Bibliographic InfoPaper provided by Harvard University Department of Economics in its series Scholarly Articles with number 3203774.
Date of creation: 1994
Date of revision:
Publication status: Published in Journal of Economic Theory
Other versions of this item:
- Fudenberg Drew & Levine David K., 1994. "Efficiency and Observability with Long-Run and Short-Run Players," Journal of Economic Theory, Elsevier, vol. 62(1), pages 103-135, February.
- D. Fudenberg & D. K. Levine, 1994. "Efficiency and Observability with Long-Run and Short-Run Players," Levine's Working Paper Archive 627, David K. Levine.
- Fudenberg, D. & Levine, D.K., 1991. "Efficiency and Obsevability with Long-Run and Short-Run Players," Working papers 591, Massachusetts Institute of Technology (MIT), Department of Economics.
- Drew Fudenberg & David K Levine, 1999. "Efficiency and Observability with Long-Run and Short-Run Players," Levine's Working Paper Archive 81, David K. Levine.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kreps, David M. & Wilson, Robert, 1982.
"Reputation and imperfect information,"
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Elsevier, vol. 27(2), pages 253-279, August.
- Fudenberg, Drew & Maskin, Eric, 1986. "The Folk Theorem in Repeated Games with Discounting or with Incomplete Information," Econometrica, Econometric Society, vol. 54(3), pages 533-54, May.
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"Noncooperative Collusion under Imperfect Price Information,"
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- Edward J Green & Robert H Porter, 1997. "Noncooperative Collusion Under Imperfect Price Information," Levine's Working Paper Archive 1147, David K. Levine.
- 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.
- Gary Hansen, 2010.
"Indivisible Labor and the Business Cycle,"
Levine's Working Paper Archive
233, David K. Levine.
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