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A belief-based approach to the repeated prisoners' dilemma with asymmetric private monitoring

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  • Chen, Bo

Abstract

This paper extends the belief-based approach to the repeated prisoners' dilemma with asymmetric private monitoring. We first find that the previous belief-based techniques [T. Sekiguchi, Efficiency in repeated prisoners' dilemma with private monitoring, J. Econ. Theory 76 (1997) 345-361; V. Bhaskar, I. Obara, Belief-based equilibria in the repeated prisoners' dilemma with private monitoring, J. Econ. Theory 102 (2002) 40-69] cannot succeed when players' private monitoring technologies are sufficiently different. We then modify the previous belief-based approach by letting the player with smaller observation errors always randomize between cooperate and defect along the cooperative path of the play. We show that with vanishing observation errors, efficiency and a folk theorem can be approximated using our modified belief-based strategies.

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  • Chen, Bo, 2010. "A belief-based approach to the repeated prisoners' dilemma with asymmetric private monitoring," Journal of Economic Theory, Elsevier, vol. 145(1), pages 402-420, January.
  • Handle: RePEc:eee:jetheo:v:145:y:2010:i:1:p:402-420
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    References listed on IDEAS

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    1. Johannes Hörner & Stefano Lovo, 2009. "Belief-Free Equilibria in Games With Incomplete Information," Econometrica, Econometric Society, vol. 77(2), pages 453-487, March.
    2. Hörner, Johannes & Lovo, Stefano & Tomala, Tristan, 2011. "Belief-free equilibria in games with incomplete information: Characterization and existence," Journal of Economic Theory, Elsevier, vol. 146(5), pages 1770-1795, September.
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    Cited by:

    1. Yuichi Yamamoto, 2012. "Individual Learning and Cooperation in Noisy Repeated Games," PIER Working Paper Archive 12-044, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    2. Yuichi Yamamoto, 2013. "Individual Learning and Cooperation in Noisy Repeated Games," PIER Working Paper Archive 13-038, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.

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