The Folk Theorem with Private Monitoring
AbstractThis paper investigates infinitely repeated prisoner-dilemma games, where the discount factor is less than but close to 1. We assume that monitoring is imperfect and private, and players' private signal structures satisfy the conditional independence. We require almost no conditions concerning the accuracy of private signals. We assume that there exist no public signals and no public randomization devices, and players cannot communicate and use only pure strategies. It is shown that the Folk Theorem holds in that every individually rational feasible payoff vector can be approximated by a sequential equilibrium payoff vector. Moreover, the Folk Theorem holds even if each player has no knowledge of her opponent's private signal structure.
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Bibliographic InfoPaper provided by CIRJE, Faculty of Economics, University of Tokyo in its series CIRJE F-Series with number CIRJE-F-123.
Length: 33 pages
Date of creation: Jul 2001
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2001-07-30 (All new papers)
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