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Repeated Games with Almost-Public Monitoring

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In repeated games with imperfect public monitoring, players can use public signals to coordinate their behavior perfectly, and thus support cooperative outcomes with the threat of punishments. But with even a small amount of private monitoring, players' private histories may lead them to have sufficiently different views of the world that such coordination on punishments is no longer possible (we describe a simple strategy profile that is a perfect public equilibrium of a repeated prisoner's dilemma with imperfect public monitoring, and yet is not an equilibrium for arbitrarily close games with private monitoring). If a perfect public equilibrium has players' behavior conditioned only on finite histories, then it induces an equilibrium in all close-by games with private monitoring. This implies a folk theorem for repeated games with almost-public almost-perfect monitoring.

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  • George J. Mailath & Stephen Morris, 1999. "Repeated Games with Almost-Public Monitoring," Cowles Foundation Discussion Papers 1236, Cowles Foundation for Research in Economics, Yale University.
  • Handle: RePEc:cwl:cwldpp:1236
    Note: CFP 1034.
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