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Efficiency in repeated games with local interaction and uncertain local monitoring

Author

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  • Nava, Francesco
  • Piccione, Michele

Abstract

This 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

  • Nava, Francesco & Piccione, Michele, 2014. "Efficiency in repeated games with local interaction and uncertain local monitoring," LSE Research Online Documents on Economics 56218, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:56218
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    File URL: http://eprints.lse.ac.uk/56218/
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    Citations

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    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.

    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

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