IDEAS home Printed from https://ideas.repec.org/p/trf/wpaper/332.html
   My bibliography  Save this paper

In?nitely Repeated Games with Public Monitoring and Monetary Transfers

Author

Listed:
  • Goldluecke, Susanne
  • Kranz, Sebastian

Abstract

In this paper, we study in?nitely repeated games with imperfect public monitoring and the possibility of monetary transfers. We develop an effcient algorithm to compute the set of pure strategy public perfect equilibrium payoffs for each discount factor. We also show how all equilibrium payoffs can be implemented with a simple class of stationary equilibria that use stick-and-carrot punishments.

Suggested Citation

  • Goldluecke, Susanne & Kranz, Sebastian, 2010. "In?nitely Repeated Games with Public Monitoring and Monetary Transfers," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 332, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    • Handle: RePEc:trf:wpaper:332
    as

    Download full text from publisher

    File URL: https://epub.ub.uni-muenchen.de/13222/1/332.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Jonathan Levin, 2003. "Relational Incentive Contracts," American Economic Review, American Economic Association, vol. 93(3), pages 835-857, June.
    2. Luis Rayo, 2007. "Relational Incentives and Moral Hazard in Teams," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 74(3), pages 937-963.
    3. Athey, Susan & Bagwell, Kyle, 2001. "Optimal Collusion with Private Information," RAND Journal of Economics, The RAND Corporation, vol. 32(3), pages 428-465, Autumn.
    4. Abreu, Dilip, 1988. "On the Theory of Infinitely Repeated Games with Discounting," Econometrica, Econometric Society, vol. 56(2), pages 383-396, March.
    5. Brian D. Wright & Kenneth M. Kletzer, 2000. "Sovereign Debt as Intertemporal Barter," American Economic Review, American Economic Association, vol. 90(3), pages 621-639, June.
    6. Klimenko, Mikhail & Ramey, Garey & Watson, Joel, 2008. "Recurrent trade agreements and the value of external enforcement," Journal of International Economics, Elsevier, vol. 74(2), pages 475-499, March.
    7. Atkeson, Andrew, 1991. "International Lending with Moral Hazard and Risk of Repudiation," Econometrica, Econometric Society, vol. 59(4), pages 1069-1089, July.
    8. Drew Fudenberg & David Levine & Eric Maskin, 2008. "The Folk Theorem With Imperfect Public Information," World Scientific Book Chapters, in: Drew Fudenberg & David K Levine (ed.), A Long-Run Collaboration On Long-Run Games, chapter 12, pages 231-273, World Scientific Publishing Co. Pte. Ltd..
    9. William Fuchs, 2007. "Contracting with Repeated Moral Hazard and Private Evaluations," American Economic Review, American Economic Association, vol. 97(4), pages 1432-1448, September.
    10. Drew Fudenberg & Eric Maskin, 2008. "The Folk Theorem In Repeated Games With Discounting Or With Incomplete Information," World Scientific Book Chapters, in: Drew Fudenberg & David K Levine (ed.), A Long-Run Collaboration On Long-Run Games, chapter 11, pages 209-230, World Scientific Publishing Co. Pte. Ltd..
    11. Kenneth L. Judd & Sevin Yeltekin & James Conklin, 2003. "Computing Supergame Equilibria," Econometrica, Econometric Society, vol. 71(4), pages 1239-1254, July.
    12. Abreu, Dilip & Dutta, Prajit K & Smith, Lones, 1994. "The Folk Theorem for Repeated Games: A NEU Condition," Econometrica, Econometric Society, vol. 62(4), pages 939-948, July.
    13. Jonathan Levin, 2002. "Multilateral Contracting and the Employment Relationship," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(3), pages 1075-1103.
    14. Joseph E. Harrington Jr. & Andrzej Skrzypacz, 2007. "Collusion under monitoring of sales," RAND Journal of Economics, RAND Corporation, vol. 38(2), pages 314-331, June.
    15. Mailath, George J. & Obara, Ichiro & Sekiguchi, Tadashi, 2002. "The Maximum Efficient Equilibrium Payoff in the Repeated Prisoners' Dilemma," Games and Economic Behavior, Elsevier, vol. 40(1), pages 99-122, July.
    16. George Baker & Robert Gibbons & Kevin J. Murphy, 2002. "Relational Contracts and the Theory of the Firm," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(1), pages 39-84.
    17. Katherine Doornik, 2006. "Relational Contracting in Partnerships," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 15(2), pages 517-548, June.
    18. Cronshaw Mark B. & Luenberger David G., 1994. "Strongly Symmetric Subgame Perfect Equilibria in Infinitely Repeated Games with Perfect Monitoring and Discounting," Games and Economic Behavior, Elsevier, vol. 6(2), pages 220-237, March.
    19. MacLeod, W Bentley & Malcomson, James M, 1989. "Implicit Contracts, Incentive Compatibility, and Involuntary Unemployment," Econometrica, Econometric Society, vol. 57(2), pages 447-480, March.
    20. Tomas Gal & Josef Nedoma, 1972. "Multiparametric Linear Programming," Management Science, INFORMS, vol. 18(7), pages 406-422, March.
    21. Abreu, Dilip & Pearce, David & Stacchetti, Ennio, 1990. "Toward a Theory of Discounted Repeated Games with Imperfect Monitoring," Econometrica, Econometric Society, vol. 58(5), pages 1041-1063, September.
    22. GAL, Thomas & NEDOMA, Jozef, 1972. "Multiparametric linear programming," LIDAM Reprints CORE 115, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    23. Kranz, Sebastian & Ohlendorf, Susanne, 2009. "Renegotiation-Proof Relational Contracts with Side Payments," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 259, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    24. Mailath, George J. & Samuelson, Larry, 2006. "Repeated Games and Reputations: Long-Run Relationships," OUP Catalogue, Oxford University Press, number 9780195300796.
    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. Goldlücke, Susanne & Kranz, Sebastian, 2013. "Renegotiation-proof relational contracts," Games and Economic Behavior, Elsevier, vol. 80(C), pages 157-178.
    2. Sebastian Kranz, 2013. "Relational Contracting, Repeated Negotiations, and Hold-Up," Levine's Working Paper Archive 786969000000000676, David K. Levine.
    3. Kolotilin, Anton & Li, Hongyi, 2021. "Relational communication," Theoretical Economics, Econometric Society, vol. 16(4), November.
    4. Heidi Gjertsen & Theodore Groves & David A Miller & Eduard Niesten & Dale Squires & Joel Watson, 2021. "Conservation Agreements: Relational Contracts with Endogenous Monitoring," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 37(1), pages 1-40.
    5. David A. Miller & Joel Watson, 2013. "A Theory of Disagreement in Repeated Games With Bargaining," Econometrica, Econometric Society, vol. 81(6), pages 2303-2350, November.
    6. Susanne Goldlücke & Sebastian Kranz, 2018. "Discounted stochastic games with voluntary transfers," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 66(1), pages 235-263, July.
    7. Daron Acemoglu & Alexander Wolitzky, 2015. "Sustaining Cooperation: Community Enforcement vs. Specialized Enforcement," NBER Working Papers 21457, National Bureau of Economic Research, Inc.
    8. Do, Jihwan, 2022. "Cheating and compensation in price-fixing cartels," Journal of Economic Theory, Elsevier, vol. 200(C).
    9. Halonen-Akatwijuka, Maija & Pafilis, Evagelos, 2020. "Common ownership of public goods," Journal of Economic Behavior & Organization, Elsevier, vol. 180(C), pages 555-578.
    10. Heidi Gjertsen & Theodore Groves & David A. Miller & Eduard Niesten & Dale Squires & Joel Watson, 2014. "A Contract-theoretic Model of Conservation Agreements," World Scientific Book Chapters, in: Kaddour Hadri & William Mikhail (ed.), Econometric Methods and Their Applications in Finance, Macro and Related Fields, chapter 15, pages 425-455, World Scientific Publishing Co. Pte. Ltd..
    11. Emilio Bisetti & Benjamin Tengelsen & Ariel Zetlin‐Jones, 2022. "Moral Hazard In Remote Teams," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 63(4), pages 1595-1623, November.
    12. David K. Levine, 2021. "Fine cartels," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 9(2), pages 155-166, October.
    13. Richter, Michael, 2014. "Fully absorbing dynamic compromise," Journal of Economic Theory, Elsevier, vol. 152(C), pages 92-104.
    14. Goldlücke, Susanne & Kranz, Sebastian, 2012. "Delegation, monitoring, and relational contracts," Economics Letters, Elsevier, vol. 117(2), pages 405-407.
    15. Blonski, Matthias & Herbold, Daniel, 2024. "Partnerships based on Joint Ownership," Games and Economic Behavior, Elsevier, vol. 144(C), pages 183-202.
    16. Goldlücke, Susanne & Kranz, Sebastian, 2017. "Reconciliating Relational Contracting and Hold-up: A Model of Repeated Negotiations," CEPR Discussion Papers 12540, C.E.P.R. Discussion Papers.
    17. Samuelson, Larry & Stacchetti, Ennio, 2017. "Even up: Maintaining relationships," Journal of Economic Theory, Elsevier, vol. 169(C), pages 170-217.
    18. Joel Watson, 2021. "Theoretical Foundations of Relational Incentive Contracts," Annual Review of Economics, Annual Reviews, vol. 13(1), pages 631-659, August.

    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. Susanne Goldlücke & Sebastian Kranz, 2018. "Discounted stochastic games with voluntary transfers," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 66(1), pages 235-263, July.
    2. David A. Miller & Joel Watson, 2013. "A Theory of Disagreement in Repeated Games With Bargaining," Econometrica, Econometric Society, vol. 81(6), pages 2303-2350, November.
    3. James M. Malcomson, 2012. "Relational Incentive Contracts [The Handbook of Organizational Economics]," Introductory Chapters,, Princeton University Press.
    4. Stefan Buehler & Dennis L. Gärtner, 2013. "Making Sense of Nonbinding Retail-Price Recommendations," American Economic Review, American Economic Association, vol. 103(1), pages 335-359, February.
    5. Joel Watson, 2021. "Theoretical Foundations of Relational Incentive Contracts," Annual Review of Economics, Annual Reviews, vol. 13(1), pages 631-659, August.
    6. Gary-Bobo, Robert J. & Jaaidane, Touria, 2014. "Strikes and slowdown in a theory of relational contracts," European Journal of Political Economy, Elsevier, vol. 36(C), pages 89-116.
    7. Samuelson, Larry & Stacchetti, Ennio, 2017. "Even up: Maintaining relationships," Journal of Economic Theory, Elsevier, vol. 169(C), pages 170-217.
    8. Kolotilin, Anton & Li, Hongyi, 2021. "Relational communication," Theoretical Economics, Econometric Society, vol. 16(4), November.
    9. Dasgupta, Ani & Ghosh, Sambuddha, 2022. "Self-accessibility and repeated games with asymmetric discounting," Journal of Economic Theory, Elsevier, vol. 200(C).
    10. Kimmo Berg & Markus Kärki, 2018. "Critical Discount Factor Values in Discounted Supergames," Games, MDPI, vol. 9(3), pages 1-17, July.
    11. Gian Luigi Albano & Berardino Cesi & Alberto Iozzi, 2023. "Teaching an old dog a new trick: Reserve price and unverifiable quality in repeated procurement," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 32(2), pages 377-399, April.
    12. De Chiara, Alessandro, 2020. "Precontractual investment and modes of procurement," European Economic Review, Elsevier, vol. 124(C).
    13. Goldlücke, Susanne & Kranz, Sebastian, 2013. "Renegotiation-proof relational contracts," Games and Economic Behavior, Elsevier, vol. 80(C), pages 157-178.
    14. Herbold, Daniel, 2014. "A repeated principal-agent model with on-the-job search," SAFE Working Paper Series 64, Leibniz Institute for Financial Research SAFE.
    15. Kimmo Berg, 2017. "Extremal Pure Strategies and Monotonicity in Repeated Games," Computational Economics, Springer;Society for Computational Economics, vol. 49(3), pages 387-404, March.
    16. Kimmo Berg & Gijs Schoenmakers, 2017. "Construction of Subgame-Perfect Mixed-Strategy Equilibria in Repeated Games," Games, MDPI, vol. 8(4), pages 1-14, November.
    17. 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.
    18. Zhao, Rui R., 2012. "Renegotiation and conflict resolution in relational contracting," Games and Economic Behavior, Elsevier, vol. 75(2), pages 964-983.
    19. Spagnolo, Giancarlo & Calzolari, Giacomo, 2009. "Relational Contracts and Competitive Screening," CEPR Discussion Papers 7434, C.E.P.R. Discussion Papers.
    20. Fong, Yuk-fai & Li, Jin, 2017. "Relational contracts, limited liability, and employment dynamics," Journal of Economic Theory, Elsevier, vol. 169(C), pages 270-293.

    More about this item

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:trf:wpaper:332. 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: Tamilla Benkelberg (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    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.