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Individual Learning and Cooperation in Noisy Repeated Games

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  • Yuichi Yamamoto

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    (Department of Economics, University of Pennsylvania)

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    Abstract

    We investigate whether two players in a long-run relationship can maintain cooperation when the details of the underlying game are unknown. Specifically, we consider a new class of repeated games with private monitoring, where an unobservable state of the world influences the payoff functions and/or the monitoring structure. Each player privately learns the state over time but cannot observe what the opponent learned. We show that there are robust equilibria in which players eventually obtain payoffs as if the true state were common knowledge and players played a “belief-free” equilibrium. We also provide explicit equilibrium constructions in various economic examples

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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 13-038.

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    Length: 78 pages
    Date of creation: 06 Jul 2013
    Date of revision:
    Handle: RePEc:pen:papers:13-038

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    Related research

    Keywords: repeated game; private monitoring; incomplete information; belief-free equilibrium; ex-post equilibrium; individual learning;

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