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Truthful Equilibria in Dynamic Bayesian Games

This paper characterizes an equilibrium payoff subset for Markovian games with private information as discounting vanishes. Monitoring is imperfect, transitions may depend on actions, types be correlated and values interdependent. The focus is on equilibria in which players report truthfully. The characterization generalizes that for repeated games, reducing the analysis to static Bayesian games with transfers. With correlated types, results from mechanism design apply, yielding a folk theorem. With independent private values, the restriction to truthful equilibria is without loss, except for the punishment level; if players withhold their information during punishment-like phases, a "folk" theorem obtains also.

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File URL: http://cowles.econ.yale.edu/P/cd/d19a/d1933.pdf
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Paper provided by Cowles Foundation for Research in Economics, Yale University in its series Cowles Foundation Discussion Papers with number 1933.

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Length: 73 pages
Date of creation: Dec 2013
Date of revision:
Handle: RePEc:cwl:cwldpp:1933
Contact details of provider: Postal: Yale University, Box 208281, New Haven, CT 06520-8281 USA
Phone: (203) 432-3702
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Web page: http://cowles.econ.yale.edu/

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Order Information: Postal: Cowles Foundation, Yale University, Box 208281, New Haven, CT 06520-8281 USA

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  1. Radner, Roy, 1986. "Repeated Partnership Games with Imperfect Monitoring and No Discounting," Review of Economic Studies, Wiley Blackwell, vol. 53(1), pages 43-57, January.
  2. Harold L. Cole & Narayana R. Kocherlakota, 1997. "Dynamic games with hidden actions and hidden states," Working Papers 583, Federal Reserve Bank of Minneapolis.
  3. Abraham Neyman, 2005. "Existence of Optimal Strategies in Markov Games with Incomplete Information," Discussion Paper Series dp413, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
  4. Cremer, Jacques & McLean, Richard P, 1988. "Full Extraction of the Surplus in Bayesian and Dominant Strategy Auctions," Econometrica, Econometric Society, vol. 56(6), pages 1247-57, November.
  5. Susan Athey & Kyle Bagwell, 1999. "Optimal Collusion with Private Information," Working papers 99-17, Massachusetts Institute of Technology (MIT), Department of Economics.
  6. Gossner, Olivier & Hörner, Johannes, 2010. "When is the lowest equilibrium payoff in a repeated game equal to the minmax payoff?," Journal of Economic Theory, Elsevier, vol. 145(1), pages 63-84, January.
  7. Drew Fudenberg & David K. Levine & Eric Maskin, 1994. "The Folk Theorem with Imperfect Public Information," Levine's Working Paper Archive 2058, David K. Levine.
  8. Ana Fernandes & Christopher Phelan, 1999. "A recursive formulation for repeated agency with history dependence," Staff Report 259, Federal Reserve Bank of Minneapolis.
  9. Doepke, Matthias & Townsend, Robert M., 2006. "Dynamic mechanism design with hidden income and hidden actions," Journal of Economic Theory, Elsevier, vol. 126(1), pages 235-285, January.
  10. Fudenberg, Drew & Yamamoto, Yuichi, 2011. "The Folk Theorem for Irreducible Stochastic Games with Imperfect Public Monitoring," Scholarly Articles 8896226, Harvard University Department of Economics.
  11. Cheng Wang, 2010. "Dynamic Insurance with Private Information and Balanced Budgets," Levine's Working Paper Archive 2064, David K. Levine.
  12. Fang,H. & Norman,P., 2003. "To bundle or not to bundle," Working papers 18, Wisconsin Madison - Social Systems.
  13. Claudio Mezzetti, 2007. "Mechanism Design with Interdependent Valuations: Surplus Extraction," Economic Theory, Springer, vol. 31(3), pages 473-488, June.
  14. Ichiro Obara, 2007. "The Full Surplus Extraction Theorem with Hidden Actions," Levine's Bibliography 843644000000000137, UCLA Department of Economics.
  15. Claudio Mezzetti, 2004. "Mechanism Design with Interdependent Valuations: Efficiency," Econometrica, Econometric Society, vol. 72(5), pages 1617-1626, 09.
  16. Kosenok, Grigory & Severinov, Sergei, 2008. "Individually rational, budget-balanced mechanisms and allocation of surplus," Journal of Economic Theory, Elsevier, vol. 140(1), pages 126-161, May.
  17. Robert J. Aumann, 1995. "Repeated Games with Incomplete Information," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011476, June.
  18. Bester, Helmut & Strausz, Roland, 2001. "Contracting with Imperfect Commitment and the Revelation Principle: The Single Agent Case," Econometrica, Econometric Society, vol. 69(4), pages 1077-98, July.
  19. Gossner, Olivier, 1995. "The Folk Theorem for Finitely Repeated Games with Mixed Strategies," International Journal of Game Theory, Springer, vol. 24(1), pages 95-107.
  20. Johannes Hörner & Takuo Sugaya & Satoru Takahashi & Nicolas Vieille, 2011. "Recursive Methods in Discounted Stochastic Games: An Algorithm for δ→ 1 and a Folk Theorem," Econometrica, Econometric Society, vol. 79(4), pages 1277-1318, 07.
  21. repec:rje:randje:v:37:y:2006:i:4:p:946-963 is not listed on IDEAS
  22. Wiseman, Thomas & Peski, Marcin, 2015. "A folk theorem for stochastic games with infrequent state changes," Theoretical Economics, Econometric Society, vol. 10(1), January.
  23. Hörner, Johannes & Takahashi, Satoru & Vieille, Nicolas, 2014. "On the limit perfect public equilibrium payoff set in repeated and stochastic games," Games and Economic Behavior, Elsevier, vol. 85(C), pages 70-83.
  24. Matthew O Jackson & Hugo F Sonnenschein, 2007. "Overcoming Incentive Constraints by Linking Decisions -super-1," Econometrica, Econometric Society, vol. 75(1), pages 241-257, 01.
  25. Abreu, Dilip & Dutta, Prajit K & Smith, Lones, 1994. "The Folk Theorem for Repeated Games: A NEU Condition," Econometrica, Econometric Society, vol. 62(4), pages 939-48, July.
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