Correlation in Repeated Games with Public Monitoring
No 14, Discussion Papers from Kyiv School of Economics
This paper studies correlation in discounted infinitely repeated games with public monitoring. Two extensions of the perfect public equilibrium are proposed: the public correlated equilibrium, where a correlation device sends private correlated messages to the players at the beginning of each period, and the public augmented equilibrium, where the device also publicly informs the players of the recommended action profile at the end of each period. The set of public correlated equilibrium payoffs is compared to the set of subgame perfect publicly correlated equilibrium payoffs in the perfect monitoring case. It is shown that augmented correlation produces efficiency gains in the repeated partnership game by Radner et al. (1986).
Keywords: Repeated Games; Extensive form correlation; Efficiency; Imperfect public monitoring; Perfect monitoring (search for similar items in EconPapers)
JEL-codes: C72 C73 (search for similar items in EconPapers)
Date: 2008-01, Revised 2009-02
Note: Under review in International Journal of Game Theory
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Persistent link: http://EconPapers.repec.org/RePEc:kse:dpaper:14
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