IDEAS home Printed from https://ideas.repec.org/a/eee/jetheo/v190y2020ics0022053120300995.html
   My bibliography  Save this article

Repeated coordination with private learning

Author

Listed:
  • Basu, Pathikrit
  • Chatterjee, Kalyan
  • Hoshino, Tetsuya
  • Tamuz, Omer

Abstract

We study a repeated game with payoff externalities and observable actions where two players receive information over time about an underlying payoff-relevant state, and strategically coordinate their actions. Players learn about the true state from private signals, as well as the actions of others. They commonly learn the true state (Cripps et al., 2008), but do not coordinate in every equilibrium. We show that there exist stable equilibria in which players can overcome unfavorable signal realizations and eventually coordinate on the correct action, for any discount factor. For high discount factors, we show that in addition players can also achieve efficient payoffs.

Suggested Citation

  • Basu, Pathikrit & Chatterjee, Kalyan & Hoshino, Tetsuya & Tamuz, Omer, 2020. "Repeated coordination with private learning," Journal of Economic Theory, Elsevier, vol. 190(C).
    • Handle: RePEc:eee:jetheo:v:190:y:2020:i:c:s0022053120300995
    DOI: 10.1016/j.jet.2020.105106
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0022053120300995
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jet.2020.105106?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Sandeep Baliga & Tomas Sjöström, 2004. "Arms Races and Negotiations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 71(2), pages 351-369.
    2. Lones Smith & Peter Sorensen, 2000. "Pathological Outcomes of Observational Learning," Econometrica, Econometric Society, vol. 68(2), pages 371-398, March.
    3. Kreps, David M & Wilson, Robert, 1982. "Sequential Equilibria," Econometrica, Econometric Society, vol. 50(4), pages 863-894, July.
    4. Glenn Ellison, 1994. "Cooperation in the Prisoner's Dilemma with Anonymous Random Matching," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 61(3), pages 567-588.
    5. Sugaya, Takuo & Yamamoto, Yuichi, 2020. "Common learning and cooperation in repeated games," Theoretical Economics, Econometric Society, vol. 15(3), July.
    6. Morris, Stephen & Shin, Hyun Song, 1998. "Unique Equilibrium in a Model of Self-Fulfilling Currency Attacks," American Economic Review, American Economic Association, vol. 88(3), pages 587-597, June.
    7. ,, 2012. "A partial folk theorem for games with private learning," Theoretical Economics, Econometric Society, vol. 7(2), May.
    8. Carlsson, Hans & van Damme, Eric, 1993. "Global Games and Equilibrium Selection," Econometrica, Econometric Society, vol. 61(5), pages 989-1018, September.
    9. Chris Edmond, 2013. "Information Manipulation, Coordination, and Regime Change," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 80(4), pages 1422-1458.
    10. George-Marios Angeletos & Christian Hellwig & Alessandro Pavan, 2007. "Dynamic Global Games of Regime Change: Learning, Multiplicity, and the Timing of Attacks," Econometrica, Econometric Society, vol. 75(3), pages 711-756, May.
    11. Yuichi Yamamoto, 2014. "Individual Learning and Cooperation in Noisy Repeated Games," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 81(1), pages 473-500.
    12. Douglas W. Diamond & Philip H. Dybvig, 2000. "Bank runs, deposit insurance, and liquidity," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 24(Win), pages 14-23.
    13. Xavier Vives, 2007. "Games of strategic complementarities: an application to Bayesian games," Spanish Economic Review, Springer;Spanish Economic Association, vol. 9(4), pages 237-247, December.
    14. Martin J. Osborne & Ariel Rubinstein, 1994. "A Course in Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262650401, April.
    15. Monderer, Dov & Samet, Dov, 1989. "Approximating common knowledge with common beliefs," Games and Economic Behavior, Elsevier, vol. 1(2), pages 170-190, June.
    16. Sekiguchi, Tadashi, 1997. "Efficiency in Repeated Prisoner's Dilemma with Private Monitoring," Journal of Economic Theory, Elsevier, vol. 76(2), pages 345-361, October.
    17. Itay Goldstein & Ady Pauzner, 2005. "Demand–Deposit Contracts and the Probability of Bank Runs," Journal of Finance, American Finance Association, vol. 60(3), pages 1293-1327, June.
    18. Sylvain Chassang, 2010. "Fear of Miscoordination and the Robustness of Cooperation in Dynamic Global Games With Exit," Econometrica, Econometric Society, vol. 78(3), pages 973-1006, May.
    19. Rubinstein, Ariel, 1989. "The Electronic Mail Game: Strategic Behavior under "Almost Common Knowledge."," American Economic Review, American Economic Association, vol. 79(3), pages 385-391, June.
    20. Drew Fudenberg & Yuichi Yamamoto, 2010. "Repeated Games Where the Payoffs and Monitoring Structure Are Unknown," Econometrica, Econometric Society, vol. 78(5), pages 1673-1710, September.
    21. Fudenberg, Drew & Yamamoto, Yuichi, 2011. "Learning from private information in noisy repeated games," Journal of Economic Theory, Elsevier, vol. 146(5), pages 1733-1769, September.
    22. Thomas Wiseman, 2005. "A Partial Folk Theorem for Games with Unknown Payoff Distributions," Econometrica, Econometric Society, vol. 73(2), pages 629-645, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mira Frick & Ryota Iijima & Yuhta Ishii, 2021. "Learning Efficiency of Multi-Agent Information Structures," Cowles Foundation Discussion Papers 2299R, Cowles Foundation for Research in Economics, Yale University, revised Dec 2021.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pathikrit Basu & Kalyan Chatterjee & Tetsuya Hoshino & Omer Tamuz, 2018. "Repeated Coordination with Private Learning," Papers 1809.00051, arXiv.org.
    2. Angeletos, G.-M. & Lian, C., 2016. "Incomplete Information in Macroeconomics," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 1065-1240, Elsevier.
    3. Yi, Ming, 2017. "Speculator-triggered crisis and interventions," Journal of Macroeconomics, Elsevier, vol. 52(C), pages 135-146.
    4. Aviad Heifetz & Willemien Kets, 2013. "Robust Multiplicity with a Grain of Naiveté," Discussion Papers 1573, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    5. Stephen Morris & Hyun Song Shin, 2000. "Global Games: Theory and Applications," Cowles Foundation Discussion Papers 1275, Cowles Foundation for Research in Economics, Yale University.
    6. Chong Huang, 2011. "Coordination and Social Learning," PIER Working Paper Archive 11-021, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    7. Kováč, Eugen & Steiner, Jakub, 2013. "Reversibility in dynamic coordination problems," Games and Economic Behavior, Elsevier, vol. 77(1), pages 298-320.
    8. Chong Huang, 2018. "Coordination and social learning," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 65(1), pages 155-177, January.
    9. Edmond, Chris, 2018. "Non-Laplacian beliefs in a global game with noisy signaling," Research in Economics, Elsevier, vol. 72(2), pages 297-312.
    10. Toni Ahnert & Ali Kakhbod, 2017. "Information Choice and Amplification of Financial Crises," The Review of Financial Studies, Society for Financial Studies, vol. 30(6), pages 2130-2178.
    11. Szkup, Michal & Trevino, Isabel, 2015. "Information acquisition in global games of regime change," Journal of Economic Theory, Elsevier, vol. 160(C), pages 387-428.
    12. Dominik Grafenhofer & Wolfgang Kuhle, 2019. "Observing Actions in Bayesian Games," Papers 1904.10744, arXiv.org.
    13. Takuo Sugaya & Yuichi Yamamoto, 2019. "Common Learning and Cooperation in Repeated Games," PIER Working Paper Archive 19-008, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    14. Roweno J. R. K. Heijmans, 2023. "Unraveling Coordination Problems," Papers 2307.08557, arXiv.org, revised Aug 2023.
    15. Iachan, Felipe S. & Nenov, Plamen T., 2015. "Information quality and crises in regime-change games," Journal of Economic Theory, Elsevier, vol. 158(PB), pages 739-768.
    16. Yuichi Yamamoto, 2014. "We Can Cooperate Even When the Monitoring Structure Will Never Be Known," PIER Working Paper Archive 17-011, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 08 Apr 2017.
    17. , & ,, 2013. "Selection-free predictions in global games with endogenous information and multiple equilibria," Theoretical Economics, Econometric Society, vol. 8(3), September.
    18. Brindisi, Francesco & Çelen, Boğaçhan & Hyndman, Kyle, 2014. "The effect of endogenous timing on coordination under asymmetric information: An experimental study," Games and Economic Behavior, Elsevier, vol. 86(C), pages 264-281.
    19. Schneorson, Oren, 2022. "Interbank credit exposures and financial stability," ESRB Working Paper Series 136, European Systemic Risk Board.
    20. Ahnert, Toni & Bertsch, Christoph, 2013. "A wake-up call: information contagion and strategic uncertainty," Working Paper Series 282, Sveriges Riksbank (Central Bank of Sweden), revised 01 Mar 2014.

    More about this item

    Keywords

    Coordination; Repeated games; Private learning; Learning from actions; Common learning;
    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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jetheo:v:190:y:2020:i:c:s0022053120300995. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/622869 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.