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Finitely repeated games with monitoring options

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  • Miyahara, Yasuyuki
  • Sekiguchi, Tadashi

Abstract

We study finitely repeated games where players can decide whether to monitor the other playersʼ actions or not every period. Monitoring is assumed to be costless and private. We compare our model with the standard one where the players automatically monitor each other. Since monitoring other players never hurts, any equilibrium payoff vector of a standard finitely repeated game is an equilibrium payoff vector of the same game with monitoring options. We show that some finitely repeated games with monitoring options have sequential equilibrium outcomes which cannot be sustained under the standard model, even if the stage game has a unique Nash equilibrium. We also present sufficient conditions for a folk theorem, when the players have a long horizon.

Suggested Citation

  • Miyahara, Yasuyuki & Sekiguchi, Tadashi, 2013. "Finitely repeated games with monitoring options," Journal of Economic Theory, Elsevier, vol. 148(5), pages 1929-1952.
    • Handle: RePEc:eee:jetheo:v:148:y:2013:i:5:p:1929-1952
    DOI: 10.1016/j.jet.2013.07.011
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    References listed on IDEAS

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    Cited by:

    1. Osório Costa, Antonio Miguel, 2012. "The Limits of Discrete Time Repeated Games:Some Notes and Comments," Working Papers 2072/203171, Universitat Rovira i Virgili, Department of Economics.
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    3. Sander Heinsalu, 2021. "Competitive pricing despite search costs when lower price signals quality," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 71(1), pages 317-339, February.

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    More about this item

    Keywords

    Finitely repeated games; Imperfect monitoring; Folk theorem;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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