Bounding equilibrium payoffs in repeated games with private monitoring
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Sugaya_et_al-2017-Theoretical_Economics.pdf
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Author(s)
Sugaya, Takuo
Wolitzky, Alexander G.
Date Issued
May 2017
Journal
Theoretical Economics
Publisher
The Econometric Society
Citation
Sugaya, Takuo, and Alexander Wolitzky. “Bounding Equilibrium Payoffs in Repeated Games with Private Monitoring.” Theoretical Economics 12, no. 2 (May 2017): 691–729. © 2017 The Authors
Version
Final published version
Abstract
We provide a simple sufficient condition for the existence of a recursive upper bound on (the Pareto frontier of) the sequential equilibrium payoff set at a fixed discount factor in two-player repeated games with imperfect private monitoring. The bounding set is the sequential equilibrium payoff set with perfect monitoring and a mediator. We show that this bounding set admits a simple recursive characterization, which nonetheless necessarily involves the use of private strategies. Under our condition, this set describes precisely those payoff vectors that arise in equilibrium for some private monitoring structure if either nonstationary monitoring or communication is allowed.
MIT Department
Massachusetts Institute of Technology. Department of Economics
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Creative Commons Attribution-NonCommercial 3.0 Unported
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DOI of Published Version
https://doi.org/10.3982/TE2270
