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The Nash Threats Folk Theorem With Communication and Approximate Common Knowledge in Two Player Games

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  • Drew Fudenberg
  • David K Levine

Abstract

We show that the use of communications to coordinate equilibria generates a Nash-threats folk theorem in two-player games with “almost public†information. The results generalize to the n -person case. However, the two-person case is more difficult because it is not possible to sustain equilibria by comparing the reports of different players, and using these “third parties†to effectively enforce contracts.
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  • Drew Fudenberg & David K Levine, 2004. "The Nash Threats Folk Theorem With Communication and Approximate Common Knowledge in Two Player Games," Levine's Working Paper Archive 618897000000000030, David K. Levine.
  • Handle: RePEc:cla:levarc:618897000000000030
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    References listed on IDEAS

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    1. Kandori, Michihiro, 2002. "Introduction to Repeated Games with Private Monitoring," Journal of Economic Theory, Elsevier, vol. 102(1), pages 1-15, January.
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    5. Richard McLean & Ichiro Obara & Andrew Postlewaite, 2001. "Informational Smallness and Private Monitoring in Repeated Games," PIER Working Paper Archive 05-024, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 20 Jul 2005.
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    7. Aoyagi, Masaki, 2002. "Collusion in Dynamic Bertrand Oligopoly with Correlated Private Signals and Communication," Journal of Economic Theory, Elsevier, vol. 102(1), pages 229-248, January.
    8. Bhaskar, V. & Obara, Ichiro, 2002. "Belief-Based Equilibria in the Repeated Prisoners' Dilemma with Private Monitoring," Journal of Economic Theory, Elsevier, vol. 102(1), pages 40-69, January.
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    10. Matsushima, Hitoshi, 1991. "On the theory of repeated games with private information : Part II: revelation through communication," Economics Letters, Elsevier, vol. 35(3), pages 257-261, March.
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    Cited by:

    1. Richard McLean & Ichiro Obara & Andrew Postlewaite, 2001. "Informational Smallness and Private Monitoring in Repeated Games," PIER Working Paper Archive 05-024, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 20 Jul 2005.
    2. repec:eee:gamebe:v:104:y:2017:i:c:p:726-743 is not listed on IDEAS
    3. Juan I. Block & David K. Levine, 2016. "Codes of conduct, private information and repeated games," International Journal of Game Theory, Springer;Game Theory Society, vol. 45(4), pages 971-984, November.
    4. Mailath, George J. & Morris, Stephen, 2006. "Coordination failure in repeated games with almost-public monitoring," Theoretical Economics, Econometric Society, vol. 1(3), pages 311-340, September.
    5. McLean, Richard & Obara, Ichiro & Postlewaite, Andrew, 2014. "Robustness of public equilibria in repeated games with private monitoring," Journal of Economic Theory, Elsevier, vol. 153(C), pages 191-212.
    6. Fudenberg, Drew & Ishii, Yuhta & Kominers, Scott Duke, 2014. "Delayed-response strategies in repeated games with observation lags," Journal of Economic Theory, Elsevier, vol. 150(C), pages 487-514.
    7. Yamamoto, Yuichi, 2012. "Characterizing belief-free review-strategy equilibrium payoffs under conditional independence," Journal of Economic Theory, Elsevier, vol. 147(5), pages 1998-2027.
    8. Obara, Ichiro, 2009. "Folk theorem with communication," Journal of Economic Theory, Elsevier, vol. 144(1), pages 120-134, January.
    9. Raduna, Daniela Viviana & Roman, Mihai Daniel, 2011. "Risk aversion influence on insurance market," MPRA Paper 37725, University Library of Munich, Germany, revised 01 Feb 2012.
    10. Roman, Mihai Daniel, 2008. "Entreprises behavior in cooperative and punishment‘s repeated negotiations," MPRA Paper 37527, University Library of Munich, Germany, revised 05 Jan 2009.
    11. Yamamoto, Yuichi, 2009. "A limit characterization of belief-free equilibrium payoffs in repeated games," Journal of Economic Theory, Elsevier, vol. 144(2), pages 802-824, March.
    12. Richard McLean & Ichiro Obara & Andrew Postlewaite, 2005. "Informational Smallness and Privae Momnitoring in Repeated Games, Second Version," PIER Working Paper Archive 11-029, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 10 Feb 2011.
    13. Zhang, Wenzhang & Chan, Jimmy H., 2016. "Approximate efficiency in repeated games with side-payments and correlated signals," Theoretical Economics, Econometric Society, vol. 11(1), January.
    14. Roman, Mihai Daniel, 2010. "A game theoretic approach of war with financial influences," MPRA Paper 38389, University Library of Munich, Germany.
    15. Takizawa, Shinichiro, 2010. "Private monitoring games and decisions under uncertainty," Economics Letters, Elsevier, vol. 108(3), pages 337-340, September.
    16. Ichiro Obara, 2005. "Informational Smallness and Private Monitoring in Repeated Games (with R. McLean and A. Postlewaite)," UCLA Economics Online Papers 365, UCLA Department of Economics.
    17. Chan, Jimmy & Zhang, Wenzhang, 2015. "Collusion enforcement with private information and private monitoring," Journal of Economic Theory, Elsevier, vol. 157(C), pages 188-211.
    18. Fong, Kyna & Sannikov, Yuliy, 2007. "Efficiency in a Repeated Prisoners' Dilemma with Imperfect Private Monitoring," Department of Economics, Working Paper Series qt8vz4q9tr, Department of Economics, Institute for Business and Economic Research, UC Berkeley.

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

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