Advanced Search
MyIDEAS: Login

Finite Automata in Undiscounted Repeated Games with Private Monitoring

Contents:

Author Info

  • Julian Romero

Abstract

I study two-player undiscounted repeated games with imperfect private monitoring. When strategies are restricted to those implementable by nite automata, fewer equilibrium outcomes are possible. When only two-state automata are allowed, a simple strategy, "Win-Stay, Lose-Shift," leads to cooperation. WSLS has the nice property that it is able to endogenously recoordinate back to cooperation after an incorrect signal. I show that WSLS is essentially the only equilibrium that leads to cooperation in the in nitely repeated Prisoner's Dilemma game. In addition, it is also an equilibrium for a wide range of 2 x 2 games. I also give necessary and sucient conditions on the structure of equilibrium strategies when players can use strategies implementable by fnite automata.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.krannert.purdue.edu/programs/phd/Working-paper-series/Year-2011/1260.pdf
Our checks indicate that this address may not be valid because: 404 Not Found. If this is indeed the case, please notify (Krannert PHD)
Download Restriction: no

Bibliographic Info

Paper provided by Purdue University, Department of Economics in its series Purdue University Economics Working Papers with number 1260.

as in new window
Length: 38 pages
Date of creation: Mar 2011
Date of revision:
Handle: RePEc:pur:prukra:1260

Contact details of provider:
Postal: Krannert Building, West Lafayette, IN 47907
Web page: http://www.krannert.purdue.edu/programs/phd
More information through EDIRC

Related research

Keywords: Bounded Rationality; Finite Automata; Prisoner's Dilemma; Private Monitoring; Tit-For-Tat; Win-Stay Lose-Shift;

Find related papers by JEL classification:

References

References listed on IDEAS
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.:
as in new window
  1. Reinhard Selten & Thorsten Chmura, 2008. "Stationary Concepts for Experimental 2x2-Games," American Economic Review, American Economic Association, vol. 98(3), pages 938-66, June.
  2. Obara, Ichiro, 2009. "Folk theorem with communication," Journal of Economic Theory, Elsevier, vol. 144(1), pages 120-134, January.
  3. Neyman, Abraham, 1985. "Bounded complexity justifies cooperation in the finitely repeated prisoners' dilemma," Economics Letters, Elsevier, vol. 19(3), pages 227-229.
  4. Michihiro Kandori & Hitoshi Matsushima, 1998. "Private Observation, Communication and Collusion," Econometrica, Econometric Society, vol. 66(3), pages 627-652, May.
  5. Pedro Dal Bo & Guillaume R. Frechette, . "The Evolution of Cooperation in Infinitely Repeated Games: Experimental Evidence," Working Papers 2007-7, Brown University, Department of Economics.
  6. Olivier Compte, 1998. "Communication in Repeated Games with Imperfect Private Monitoring," Econometrica, Econometric Society, vol. 66(3), pages 597-626, May.
  7. Lehrer, Ehud, 1988. "Repeated games with stationary bounded recall strategies," Journal of Economic Theory, Elsevier, vol. 46(1), pages 130-144, October.
  8. Fudenberg, Drew & Levine, David I & Maskin, Eric, 1994. "The Folk Theorem with Imperfect Public Information," Econometrica, Econometric Society, vol. 62(5), pages 997-1039, September.
  9. Sabourian, Hamid, 1998. "Repeated games with M-period bounded memory (pure strategies)," Journal of Mathematical Economics, Elsevier, vol. 30(1), pages 1-35, August.
  10. Olivier Compte & Andrew Postlewaite, 2010. "Plausible Cooperation,Third Version," PIER Working Paper Archive 13-008, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 01 Dec 2012.
  11. Lehrer, Ehud, 1992. "On the Equilibrium Payoffs Set of Two Player Repeated Games with Imperfect Monitoring," International Journal of Game Theory, Springer, vol. 20(3), pages 211-26.
  12. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:pur:prukra:1260. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Krannert PHD).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.