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Recursive structure and equilibria in games with private monitoring

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  • Massimiliano Amarante

Abstract

In each stage of a repeated game with private monitoring, the players receive payoffs and privately observe signals which depend on the players' actions and the state of world. I show that, contrary to a widely held belief, such games admit a recursive structure. More precisely, I construct a representation of the original sequential problem as a sequence of static games with incomplete information. This establishes the ground for a characterization of strategies and, hence, of behavior in interactive-decision settings where private information is present. Finally, the representation is used to give a recursive characterization of the equilibrium payoff set, by means of a multi-player generalization of dynamic programming. Copyright Springer-Verlag Berlin Heidelberg 2003

Suggested Citation

  • Massimiliano Amarante, 2003. "Recursive structure and equilibria in games with private monitoring," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 22(2), pages 353-374, September.
    • Handle: RePEc:spr:joecth:v:22:y:2003:i:2:p:353-374
    DOI: 10.1007/s00199-002-0322-7
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    Citations

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    Cited by:

    1. Mailath, George J. & Morris, Stephen, 2002. "Repeated Games with Almost-Public Monitoring," Journal of Economic Theory, Elsevier, vol. 102(1), pages 189-228, January.
    2. Sugaya, Takuo & Wolitzky, Alexander, 2017. "Bounding equilibrium payoffs in repeated games with private monitoring," Theoretical Economics, Econometric Society, vol. 12(2), May.
    3. Tomala, Tristan, 2009. "Perfect communication equilibria in repeated games with imperfect monitoring," Games and Economic Behavior, Elsevier, vol. 67(2), pages 682-694, November.
    4. William Fuchs, 2007. "Contracting with Repeated Moral Hazard and Private Evaluations," American Economic Review, American Economic Association, vol. 97(4), pages 1432-1448, September.
    5. Sugaya, Takuo & Wolitzky, Alexander, 2018. "Bounding payoffs in repeated games with private monitoring: n-player games," Journal of Economic Theory, Elsevier, vol. 175(C), pages 58-87.

    More about this item

    Keywords

    Keywords and Phrases: Private monitoring; Incomplete information; Dynamic programming.; JEL Classification Numbers: C73; D82.;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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