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Coordination failure in repeated games with private monitoring

  • Sugaya, Takuo
  • Takahashi, Satoru

Players coordinate continuation play in repeated games with public monitoring. We investigate the robustness of such equilibrium behavior with respect to ex-ante small private-monitoring perturbations. We show that with full support of public signals, no perfect public equilibrium is robust if it induces a “regular” 2×2 coordination game in the continuation play. This regularity condition is violated in all belief-free equilibria. Indeed, with an individual full rank condition, every interior belief-free equilibrium is robust. We also analyze block belief-free equilibria and point out that the notion of robustness is sensitive to whether we allow for uninterpretable signals.

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Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 148 (2013)
Issue (Month): 5 ()
Pages: 1891-1928

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Handle: RePEc:eee:jetheo:v:148:y:2013:i:5:p:1891-1928
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