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Repeated games with local monitoring and private communication

  • Laclau, M.

I consider repeated games with local monitoring: each player observes his neighbors’ moves only. Hence, monitoring is private and imperfect. Communication is private: each player can send different (costless) messages to different players. The solution concept is perfect Bayesian equilibrium. I prove that a folk theorem holds if and only if each player has two neighbors. This extends the result of Ben-Porath and Kahneman (1996) to private communication, provided the existence of sequential equilibrium.

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Article provided by Elsevier in its journal Economics Letters.

Volume (Year): 120 (2013)
Issue (Month): 2 ()
Pages: 332-337

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Handle: RePEc:eee:ecolet:v:120:y:2013:i:2:p:332-337
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  1. Fudenberg, Drew & Levine, David K., 1991. "An approximate folk theorem with imperfect private information," Journal of Economic Theory, Elsevier, vol. 54(1), pages 26-47, June.
  2. Radner, Roy, 1986. "Repeated Partnership Games with Imperfect Monitoring and No Discounting," Review of Economic Studies, Wiley Blackwell, vol. 53(1), pages 43-57, January.
  3. Obara, Ichiro, 2009. "Folk theorem with communication," Journal of Economic Theory, Elsevier, vol. 144(1), pages 120-134, January.
  4. Fudenberg, Drew & Tirole, Jean, 1991. "Perfect Bayesian equilibrium and sequential equilibrium," Journal of Economic Theory, Elsevier, vol. 53(2), pages 236-260, April.
  5. Ben-Porath, Elchanan & Kahneman, Michael, 1996. "Communication in Repeated Games with Private Monitoring," Journal of Economic Theory, Elsevier, vol. 70(2), pages 281-297, August.
  6. Drew Fudenberg & Eric Maskin, 1987. "On the Dispensability of Public Randomization in Discounted Repeated Games," Working papers 467, Massachusetts Institute of Technology (MIT), Department of Economics.
  7. Renault, J. & Tomala, T., 1997. "Repeated Proximity Games," Papiers d'Economie Mathématique et Applications 97.14, Université Panthéon-Sorbonne (Paris 1).
  8. Abreu, Dilip & Dutta, Prajit K & Smith, Lones, 1994. "The Folk Theorem for Repeated Games: A NEU Condition," Econometrica, Econometric Society, vol. 62(4), pages 939-48, July.
  9. Michihiro Kandori & Hitoshi Matsushima, 1998. "Private Observation, Communication and Collusion," Econometrica, Econometric Society, vol. 66(3), pages 627-652, May.
  10. SORIN, Sylvain, 1988. "Repeated games with complete information," CORE Discussion Papers 1988022, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  11. Fudenberg, Drew & Maskin, Eric, 1986. "The Folk Theorem in Repeated Games with Discounting or with Incomplete Information," Econometrica, Econometric Society, vol. 54(3), pages 533-54, May.
  12. 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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