IDEAS home Printed from https://ideas.repec.org/a/the/publsh/1200.html
   My bibliography  Save this article

Efficiency in repeated games with local interaction and uncertain local monitoring

Author

Listed:
  • ,

    (Economics Department, London School of Economics)

  • ,

    (Economics Department, London School of Economics)

Abstract

The paper discusses community enforcement in infinitely repeated, two-action games with local interaction and uncertain monitoring. Each player interacts with and observes only a fixed set of opponents, of whom he is privately informed. The main result shows that when beliefs about the monitoring structure have full support, efficiency can be sustained with sequential equilibria that are independent of the players' beliefs. Stronger results are obtained when only acyclic monitoring structures are allowed or players have unit discount rates. These equilibria satisfy numerous robustness properties.

Suggested Citation

  • , & ,, 2014. "Efficiency in repeated games with local interaction and uncertain local monitoring," Theoretical Economics, Econometric Society, vol. 9(1), January.
    • Handle: RePEc:the:publsh:1200
    as

    Download full text from publisher

    File URL: http://econtheory.org/ojs/index.php/te/article/viewFile/20140279/10218/319
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Cho, Myeonghwan, 2011. "Public randomization in the repeated prisoner's dilemma game with local interaction," Economics Letters, Elsevier, vol. 112(3), pages 280-282, September.
    2. Gilli, Mario, 1999. "On Non-Nash Equilibria," Games and Economic Behavior, Elsevier, vol. 27(2), pages 184-203, May.
    3. Itay P. Fainmesser, 2012. "Community Structure and Market Outcomes: A Repeated Games-in-Networks Approach," American Economic Journal: Microeconomics, American Economic Association, vol. 4(1), pages 32-69, February.
    4. JÊrÆme Renault & Tristan Tomala, 1998. "Repeated proximity games," International Journal of Game Theory, Springer;Game Theory Society, vol. 27(4), pages 539-559.
    5. Joyee Deb, 2008. "Cooperation and Community Responsibility: A Folk Theorem for Repeated Matching Games with Names," Working Papers 08-24, New York University, Leonard N. Stern School of Business, Department of Economics.
    6. Fainmesser, Itay P. & Goldberg, David A., 2018. "Cooperation in partly observable networked markets," Games and Economic Behavior, Elsevier, vol. 107(C), pages 220-237.
    7. Vega-Redondo, Fernando, 2006. "Building up social capital in a changing world," Journal of Economic Dynamics and Control, Elsevier, vol. 30(11), pages 2305-2338, November.
    8. David Miller & Nageeb Ali, 2008. "Cooperation and Collective Enforcement in Networked Societies," 2008 Meeting Papers 970, Society for Economic Dynamics.
    9. 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.
    10. McBride, Michael, 2006. "Imperfect monitoring in communication networks," Journal of Economic Theory, Elsevier, vol. 126(1), pages 97-119, January.
    11. Takahashi, Satoru, 2010. "Community enforcement when players observe partners' past play," Journal of Economic Theory, Elsevier, vol. 145(1), pages 42-62, January.
    12. Matthew O. Jackson & Tomas Rodriguez-Barraquer & Xu Tan, 2012. "Social Capital and Social Quilts: Network Patterns of Favor Exchange," American Economic Review, American Economic Association, vol. 102(5), pages 1857-1897, August.
    13. Alexander Wolitzky, 2013. "Cooperation with Network Monitoring," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 80(1), pages 395-427.
    14. Ben-Porath, Elchanan & Kahneman, Michael, 1996. "Communication in Repeated Games with Private Monitoring," Journal of Economic Theory, Elsevier, vol. 70(2), pages 281-297, August.
    15. Markus Kinateder, 2006. "Repeated Games Played in a Network," UFAE and IAE Working Papers 674.06, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    16. Myeonghwan Cho, 2014. "Cooperation in the repeated prisoner's dilemma game with local interaction and local communication," International Journal of Economic Theory, The International Society for Economic Theory, vol. 10(3), pages 235-262, September.
    17. Michihiro Kandori, 1992. "Social Norms and Community Enforcement," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 59(1), pages 63-80.
    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. Laclau, M., 2014. "Communication in repeated network games with imperfect monitoring," Games and Economic Behavior, Elsevier, vol. 87(C), pages 136-160.
    2. Mihm, Maximilian & Toth, Russell, 2020. "Cooperative networks with robust private monitoring," Journal of Economic Theory, Elsevier, vol. 185(C).
    3. Deb, Joyee & Gonzalez-Diaz, Julio, 2019. "Enforcing social norms: Trust-building and community enforcement," Theoretical Economics, Econometric Society, vol. 14(4), November.
    4. Ambrus, A. & Elliott, M., 2020. "Investments in Social Ties, Risk Sharing and Inequality," Cambridge Working Papers in Economics 2071, Faculty of Economics, University of Cambridge.
    5. Fainmesser, Itay P., 2019. "Exclusive intermediation in unobservable networks," Games and Economic Behavior, Elsevier, vol. 113(C), pages 533-548.
    6. Joyee Deb & Takuo Sugaya & Alexander Wolitzky, 2020. "The Folk Theorem in Repeated Games With Anonymous Random Matching," Econometrica, Econometric Society, vol. 88(3), pages 917-964, May.
    7. Fainmesser, Itay P. & Goldberg, David A., 2018. "Cooperation in partly observable networked markets," Games and Economic Behavior, Elsevier, vol. 107(C), pages 220-237.
    8. Leduc, Mathieu V., 2024. "Simple relational contracts and the dynamics of social capital," Games and Economic Behavior, Elsevier, vol. 145(C), pages 27-53.

    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. Nava, Francesco & Piccione, Michele, 2012. "Efficiency in repeated games with local interaction and uncertain local monitoring," LSE Research Online Documents on Economics 54250, London School of Economics and Political Science, LSE Library.
    2. Nava, Francesco & Piccione, Michele, 2011. "Efficiency in repeated two-action games with local monitoring," LSE Research Online Documents on Economics 58062, London School of Economics and Political Science, LSE Library.
    3. Fainmesser, Itay P. & Goldberg, David A., 2018. "Cooperation in partly observable networked markets," Games and Economic Behavior, Elsevier, vol. 107(C), pages 220-237.
    4. Fainmesser, Itay P., 2019. "Exclusive intermediation in unobservable networks," Games and Economic Behavior, Elsevier, vol. 113(C), pages 533-548.
    5. Francesco Nava & Michele Piccione, 2011. "Efficiency in Repeated Two-Action Games with Local Monitoring," STICERD - Theoretical Economics Paper Series 560, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    6. Daron Acemoglu & Alexander Wolitzky, 2015. "Sustaining Cooperation: Community Enforcement vs. Specialized Enforcement," Levine's Bibliography 786969000000001179, UCLA Department of Economics.
    7. Balmaceda, Felipe & Escobar, Juan F., 2017. "Trust in cohesive communities," Journal of Economic Theory, Elsevier, vol. 170(C), pages 289-318.
    8. Feinberg, Yossi & Kets, Willemien, 2014. "Ranking friends," Journal of Economic Behavior & Organization, Elsevier, vol. 107(PA), pages 1-9.
    9. Polanski, Arnold, 2024. "Close-knit neighborhoods: Stability of cooperation in networks," Journal of Economic Theory, Elsevier, vol. 215(C).
    10. Levine, David K. & Modica, Salvatore, 2016. "Peer discipline and incentives within groups," Journal of Economic Behavior & Organization, Elsevier, vol. 123(C), pages 19-30.
    11. Itay P. Fainmesser & David A. Goldberg, 2011. "Bilateral and Community Enforcement in a Networked Market with Simple Strategies," Working Papers 2011-2, Brown University, Department of Economics.
    12. Lippert, Steffen & Spagnolo, Giancarlo, 2011. "Networks of relations and Word-of-Mouth Communication," Games and Economic Behavior, Elsevier, vol. 72(1), pages 202-217, May.
    13. Mihm, Maximilian & Toth, Russell, 2020. "Cooperative networks with robust private monitoring," Journal of Economic Theory, Elsevier, vol. 185(C).
    14. Oguzhan Celebi, 2023. "Substitutability in Favor Exchange," Papers 2309.10749, arXiv.org.
    15. Itay Fainmesser, 2014. "Exclusive Intermediation," Working Papers 2014-3, Brown University, Department of Economics.
    16. Itay P. Fainmesser, 2012. "Community Structure and Market Outcomes: A Repeated Games-in-Networks Approach," American Economic Journal: Microeconomics, American Economic Association, vol. 4(1), pages 32-69, February.
    17. Laclau, M., 2014. "Communication in repeated network games with imperfect monitoring," Games and Economic Behavior, Elsevier, vol. 87(C), pages 136-160.
    18. Jackson, Matthew O. & Zenou, Yves, 2015. "Games on Networks," Handbook of Game Theory with Economic Applications,, Elsevier.
    19. Deb, Joyee & González-Díaz, Julio & Renault, Jérôme, 2016. "Uniform folk theorems in repeated anonymous random matching games," Games and Economic Behavior, Elsevier, vol. 100(C), pages 1-23.
    20. Daniel Monte & Roberto Pinheiro, 2017. "Costly Information Intermediation: Quality vs. Spillovers," Working Papers 17-21R2, Federal Reserve Bank of Cleveland, revised 05 Dec 2024.

    More about this item

    Keywords

    Local monitoring; repeated games; cooperation; networks;
    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
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

    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:the:publsh:1200. 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: Martin J. Osborne (email available below). General contact details of provider: http://econtheory.org .

    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.