Repeated Games with Private Monitoring: Two Players
Year: 2004
Type: article
Abstract: We investigate two-player infinitely repeated games where the discount factor is less than but close to unity. Monitoring is private and players cannot communicate. We require no condition concerning the accuracy of players' monitoring technology. We show the folk theorem for the prisoners' dilemma with conditional independence. We also investigate more general games where players' private signals are correlated only through an unobservable macro shock. We show that efficiency is sustainable for generic private signal structures when the size of the set of private signals is sufficiently large. Finally, we show that cartel collusion is sustainable in price-setting duopoly.
Source: Econometrica
Author: Hitoshi Matsushima
Institution: The University of Tokyo
Language: English
Topic: Game Theory and Applications
Field: Decision Sciences
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W1485400694