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Coordination Failure in Repeated Games with Almost-Public Monitoring

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  • George J. Mailath

    ()
    (Department of Economics, University of Pennsylvania)

  • Stephen Morris

    ()
    (Cowles Foundation, Yale University)

Abstract

Some private-monitoring games, that is, games with no public histories, can have histories that are almost public. These games are the natural result of perturbing public monitoring games towards private monitoring. We explore the extent to which it is possible to coordinate continuation play in such games. It is always possible to coordinate continuation play by requiring behavior to have bounded recall (i.e., there is a bound L such that in any period, the last L signals are sufficient to determine behavior). We show that, in games with general almost-public private monitoring, this is essentially the only behavior that can coordinate continuation play.

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Bibliographic Info

Paper provided by Penn Institute for Economic Research, Department of Economics, University of Pennsylvania in its series PIER Working Paper Archive with number 05-014.

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Length: 36 pages
Date of creation: 20 Aug 2004
Date of revision: 23 Mar 2005
Handle: RePEc:pen:papers:05-014

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Keywords: repeated games; private monitoring; almost-public monitoring; coordination; bounded recall;

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References

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  1. V. Bhaskar & Eric van Damme, 1998. "Moral Hazard and Private Monitoring," Game Theory and Information 9809004, EconWPA.
  2. Piccione, Michele, 2002. "The Repeated Prisoner's Dilemma with Imperfect Private Monitoring," Journal of Economic Theory, Elsevier, vol. 102(1), pages 70-83, January.
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  5. Fudenberg, D. & Levine, D.K. & Maskin, E., 1989. "The Folk Theorem With Inperfect Public Information," Working papers 523, Massachusetts Institute of Technology (MIT), Department of Economics.
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  17. Sekiguchi, Tadashi, 1997. "Efficiency in Repeated Prisoner's Dilemma with Private Monitoring," Journal of Economic Theory, Elsevier, vol. 76(2), pages 345-361, October.
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