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Robustness of public equilibria in repeated games with private monitoring

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  • McLean, Richard
  • Obara, Ichiro
  • Postlewaite, Andrew

Abstract

A repeated game with private monitoring is “close” to a repeated game with public monitoring (or perfect monitoring) when (i) the expected payoff structures are close and (ii) the informational structures are close in the sense that private signals in the private monitoring game can be aggregated by some public coordination device to generate a public signal whose distribution is close to the distribution of the public signal in the public monitoring game. We provide a sufficient condition for the set of uniformly strict perfect public equilibria for a public monitoring game to be robust in nearby private monitoring games in the sense that they remain equilibria with respect to the public signal that is generated by such public coordination devices with truthful reporting. Our sufficient condition requires that every player is informationally small in a well-defined sense.

Suggested Citation

  • McLean, Richard & Obara, Ichiro & Postlewaite, Andrew, 2014. "Robustness of public equilibria in repeated games with private monitoring," Journal of Economic Theory, Elsevier, vol. 153(C), pages 191-212.
    • Handle: RePEc:eee:jetheo:v:153:y:2014:i:c:p:191-212
    DOI: 10.1016/j.jet.2014.06.007
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    More about this item

    Keywords

    Communication; Informational size; Private monitoring; Public monitoring; Repeated games; Robustness;
    All these keywords.

    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
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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