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Approximate efficiency in repeated games with side-payments and correlated signals

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  • , H.

    (School of Economics, Fudan University)

  • ,

    (School of Economics, Shanghai University of Finance and Economics)

Abstract

Side-payments are common in many long-term relationships. We show that when players can exchange side-payments, approximate efficiency is achievable in any repeated game with private monitoring and communication, so long as the players can observe their own payoffs and are sufficiently patient, the efficient stage-game outcome is unique, and the signal distribution has full support. Unlike existing results in the literature, our result does not require deviations be statistically detectable.

Suggested Citation

  • , H. & ,, 2016. "Approximate efficiency in repeated games with side-payments and correlated signals," Theoretical Economics, Econometric Society, vol. 11(1), January.
    • Handle: RePEc:the:publsh:1369
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    References listed on IDEAS

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    More about this item

    Keywords

    Repeated games; private monitoring; communication;
    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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