TY - JOUR
T1 - Communication and cooperation in repeated games
AU - Awaya, Yu
AU - Krishna, Vijay
N1 - Funding Information:
Yu Awaya: [email protected] Vijay Krishna: [email protected] The research reported here was supported by a grant from the National Science Foundation (SES-1626783). We are grateful to Gabriel Carroll, Tim Roughgarden, and Satoru Takahashi for their comments and suggestions. The referees provided valuable input. 1The set of equilibrium payoffs with pre-play communication is contained within the set of correlated equilibrium payoffs of the original game. This follows from Aumann (1987).
Publisher Copyright:
Copyright © 2019 The Authors.
PY - 2019/5
Y1 - 2019/5
N2 - We study the role of communication in repeated games with private monitoring. We first show that without communication, the set of Nash equilibrium payoffs in such games is a subset of the set of ε-coarse correlated equilibrium payoffs (ε-CCE) of the underlying one-shot game. The value of ε depends on the discount factor and the quality of monitoring. We then identify conditions under which there are equilibria with “cheap talk” that result in nearly efficient payoffs outside the set ε-CCE. Thus, in our model, communication is necessary for cooperation.
AB - We study the role of communication in repeated games with private monitoring. We first show that without communication, the set of Nash equilibrium payoffs in such games is a subset of the set of ε-coarse correlated equilibrium payoffs (ε-CCE) of the underlying one-shot game. The value of ε depends on the discount factor and the quality of monitoring. We then identify conditions under which there are equilibria with “cheap talk” that result in nearly efficient payoffs outside the set ε-CCE. Thus, in our model, communication is necessary for cooperation.
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U2 - 10.3982/TE3049
DO - 10.3982/TE3049
M3 - Article
AN - SCOPUS:85066270395
SN - 1933-6837
VL - 14
SP - 513
EP - 553
JO - Theoretical Economics
JF - Theoretical Economics
IS - 2
ER -