Truthful Equilibria in Dynamic Bayesian Games
76 Pages Posted: 21 Jan 2015
Date Written: January 20, 2015
This paper characterizes an equilibrium payoff subset for dynamic Bayesian games as discounting vanishes. Monitoring is imperfect, transitions may depend on actions, types may be correlated and values may be interdependent. The focus is on equilibria in which players report truthfully. The characterization generalizes that for repeated games, reducing the analysis to static Bayesian games with transfers. With independent private values, the restriction to truthful equilibria is without loss, except for the punishment level; if players withhold their information during punishment-like phases, a folk theorem obtains.
Keywords: Bayesian games, Repeated games, Folk theorem
JEL Classification: C72, C73
Suggested Citation: Suggested Citation