Repeated Coordination with Private Learning
29 Pages Posted: 5 Dec 2017
Date Written: December 4, 2017
We study a repeated game with payoff externalities and observable actions where two players receive information over time about an underlying payoff-relevant state, and strategically coordinate their actions. Players learn about the true state from private signals, as well as the actions of others. They commonly learn the true state (Cripps et al., 2008), but do not coordinate in every equilibrium. We show that it is possible to construct equilibria in which players eventually coordinate on the correct action, for any discount factor. For high discount factors we show that in addition players can also achieve efficient payoffs.
Keywords: Repeated Games, Coordination, Learning
JEL Classification: C73
Suggested Citation: Suggested Citation