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Individual Learning and Cooperation in Noisy Repeated Games

Author

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  • Yuichi Yamamoto

    () (Department of Economics, University of Pennsylvania)

Abstract

We investigate whether two players in a long-run relationship can maintain cooperation when the details of the underlying game are unknown. Specifically, we consider a new class of repeated games with private monitoring, where an unobservable state of the world influences the payoff functions and/or the monitoring structure. Each player privately learns the state over time but cannot observe what the opponent learned. We show that there are robust equilibria in which players eventually obtain payoffs as if the true state were common knowledge and players played a “belief-free” equilibrium. We also provide explicit equilibrium constructions in various economic examples

Suggested Citation

  • Yuichi Yamamoto, 2013. "Individual Learning and Cooperation in Noisy Repeated Games," PIER Working Paper Archive 13-038, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
  • Handle: RePEc:pen:papers:13-038
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    File URL: http://economics.sas.upenn.edu/system/files/13-038.pdf
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    References listed on IDEAS

    as
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    Cited by:

    1. Heller, Yuval, 2015. "Instability of Equilibria with Imperfect Private Monitoring," MPRA Paper 64468, University Library of Munich, Germany.
    2. repec:pra:mprapa:64485 is not listed on IDEAS

    More about this item

    Keywords

    repeated game; private monitoring; incomplete information; belief-free equilibrium; ex-post equilibrium; individual learning;

    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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