Communication and Cooperation in Repeated Games
34 Pages Posted: 9 Feb 2017
Date Written: January 13, 2017
Abstract
We study the role of communication in repeated games with private monitoring. In such games, players receive only noisy private signals about each other's actions. For a fixed discount factor, we identify conditions under which there are equilibria with "cheap talk" that result in nearly efficient payoffs, whereas all equilibria without such communication are bounded away from this outcome. Thus, in our model, communication is necessary for cooperation.
Keywords: Comunication, Repeated Games, Private Monitoring
JEL Classification: C73, D43, D83
Suggested Citation: Suggested Citation
Awaya, Yu and Krishna, Vijay, Communication and Cooperation in Repeated Games (January 13, 2017). Available at SSRN: https://ssrn.com/abstract=2914062 or http://dx.doi.org/10.2139/ssrn.2914062
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