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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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  1. Mailath, George J. & Morris, Stephen, 2002. "Repeated Games with Almost-Public Monitoring," Journal of Economic Theory, Elsevier, vol. 102(1), pages 189-228, January.
  2. Harold L. Cole & Narayana R. Kocherlakota, 2001. "Finite memory and imperfect monitoring," Staff Report 287, Federal Reserve Bank of Minneapolis.
  3. Richard McLean & Andrew Postlewaite, 2002. "Informational Size and Efficient Auctions," PIER Working Paper Archive 03-011, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 13 Apr 2003.
  4. V. Bhaskar & George J. Mailath & Stephen Morris, 2008. "Purification in the Infinitely-Repeated Prisoners' Dilemma," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(3), pages 515-528, July.
  5. Hitoshi Matsushima, 2004. "Repeated Games with Private Monitoring: Two Players," Econometrica, Econometric Society, vol. 72(3), pages 823-852, 05.
  6. 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.
  7. Bhaskar, V., 1994. "Informational Constraints and the Overlapping Generations Model: Folk and Anti-Folk Theorems," Papers 9485, Tilburg - Center for Economic Research.
  8. Bhaskar, V. & Obara, Ichiro, 2002. "Belief-Based Equilibria in the Repeated Prisoners' Dilemma with Private Monitoring," Journal of Economic Theory, Elsevier, vol. 102(1), pages 40-69, January.
  9. Ely, Jeffrey C. & Valimaki, Juuso, 2002. "A Robust Folk Theorem for the Prisoner's Dilemma," Journal of Economic Theory, Elsevier, vol. 102(1), pages 84-105, January.
  10. Sekiguchi, Tadashi, 1997. "Efficiency in Repeated Prisoner's Dilemma with Private Monitoring," Journal of Economic Theory, Elsevier, vol. 76(2), pages 345-361, October.
  11. Michihiro Kandori & Hitoshi Matsushima, 1998. "Private Observation, Communication and Collusion," Econometrica, Econometric Society, vol. 66(3), pages 627-652, May.
  12. Drew Fudenberg & David K. Levine, 2002. "The Nash Threats Folk Theorem With Communication and Approximate Common Knowledge In Two Player Games," Harvard Institute of Economic Research Working Papers 1961, Harvard - Institute of Economic Research.
  13. Bhaskar, V. & van Damme, Eric, 2002. "Moral Hazard and Private Monitoring," Journal of Economic Theory, Elsevier, vol. 102(1), pages 16-39, January.
  14. Mailath, George J. & Samuelson, Larry, 2006. "Repeated Games and Reputations: Long-Run Relationships," OUP Catalogue, Oxford University Press, number 9780195300796, September.
  15. Monderer, Dov & Samet, Dov, 1989. "Approximating common knowledge with common beliefs," Games and Economic Behavior, Elsevier, vol. 1(2), pages 170-190, June.
  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. Johannes Horner & Wojciech Olszewski, 2005. "The Folk Theorem for Games with Private, Almost-Perfect Monitoring," NajEcon Working Paper Reviews 172782000000000006, www.najecon.org.
  18. Rich McLean & Ichiro Obara & Andrew Postlewaite, 2005. "Informational Smallness and Private Monitoring in Repeated Games," Levine's Bibliography 784828000000000261, UCLA Department of Economics.
  19. Jeffrey C. Ely & Johannes Hörner & Wojciech Olszewski, 2005. "Belief-Free Equilibria in Repeated Games," Econometrica, Econometric Society, vol. 73(2), pages 377-415, 03.
  20. Michihiro Kandori & Hitoshi Matsushima, 1997. "Private observation and Communication and Collusion," Levine's Working Paper Archive 1256, David K. Levine.
  21. Olivier Compte, 1998. "Communication in Repeated Games with Imperfect Private Monitoring," Econometrica, Econometric Society, vol. 66(3), pages 597-626, May.
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