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The Folk Theorem With Imperfect Public Information

In: A Long-Run Collaboration On Long-Run Games

Author

Listed:
  • DREW FUDENBERG

    (Dept. of Economics, Harvard University, Cambridge, MA 02138, U.S.A.)

  • DAVID LEVINE

    (Dept. of Economics, University of California—Los Angeles, Los Angeles, CA 90024, U.S.A.)

  • ERIC MASKIN

    (Dept. of Economics, Harvard University, Cambridge, MA 02138, U.S.A.)

Abstract

We study repeated games in which players observe a public outcome that imperfectly signals the actions played. We provide conditions guaranteeing that any feasible, individually rational payoff vector of the stage game can arise as a perfect equilibrium of the repeated game with sufficiently little discounting. The central condition requires that there exist action profiles with the property that, for any two players, no two deviations—one by each player—give rise to the same probability distribution over public outcomes. The results apply to principal-agent, partnership, oligopoly, and mechanismdesign models, and to one-shot games with transferable utilities.

Suggested Citation

  • Drew Fudenberg & David Levine & Eric Maskin, 2008. "The Folk Theorem With Imperfect Public Information," World Scientific Book Chapters, in: Drew Fudenberg & David K Levine (ed.), A Long-Run Collaboration On Long-Run Games, chapter 12, pages 231-273, World Scientific Publishing Co. Pte. Ltd..
  • Handle: RePEc:wsi:wschap:9789812818478_0012
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    References listed on IDEAS

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    1. Radner, Roy, 1985. "Repeated Principal-Agent Games with Discounting," Econometrica, Econometric Society, vol. 53(5), pages 1173-1198, September.
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    More about this item

    Keywords

    Long-Run Players; Limit Games; Robustness; Equilibrium; Reputation Effects; Repeated Games;
    All these keywords.

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General

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