The Impact of Monitoring in Infinitely Repeated Games: Perfect, Public, and Private

39 Pages Posted: 31 Jul 2015

See all articles by Masaki Aoyagi

Masaki Aoyagi

Osaka University - Institute of Social and Economic Research (ISER)

V. Bhaskar

University College London

Guillaume R. Frechette

New York University (NYU) - Department of Economics

Date Written: July 27, 2015

Abstract

This paper uses a laboratory experiment to study the effect of a monitoring structure on the play of the infinitely repeated prisoner’s dilemma. Keeping the stage game fixed, we examine the behavior of subjects when information about past actions is perfect (perfect monitoring), noisy but public (public monitoring), and noisy and private (private monitoring). We find that the subjects sustain cooperation in every treatment, but that their strategies differ substantially in the three treatments. Specifically, we observe that the strategies are more complex under public and private monitoring than under perfect monitoring. We also find that the strategies under private monitoring are more lenient than under perfect monitoring, and less forgiving than under public monitoring.

Keywords: Infinitely repeated games, monitoring, perfect, public, private, experiments

JEL Classification: C72, C73, C92

Suggested Citation

Aoyagi, Masaki and Bhaskar, V. and Frechette, Guillaume R., The Impact of Monitoring in Infinitely Repeated Games: Perfect, Public, and Private (July 27, 2015). ISER Discussion Paper No. 942, Available at SSRN: https://ssrn.com/abstract=2638182

Masaki Aoyagi (Contact Author)

Osaka University - Institute of Social and Economic Research (ISER) ( email )

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Ibaraki, Osaka 567-0047
Japan
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V. Bhaskar

University College London ( email )

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London
United Kingdom

Guillaume R. Frechette

New York University (NYU) - Department of Economics ( email )

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New York, NY 10012
United States

HOME PAGE: http://https://files.nyu.edu/gf35/public/html/econ.htm

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