Online concealed correlation and bounded rationality

Gilad Bavly and Abraham Neyman ()

Games and Economic Behavior, 2014, vol. 88, issue C, 71-89

Abstract: Correlation of players' actions may evolve in the common course of the play of a repeated game with perfect monitoring (“online correlation”). In this paper we study the concealment of such correlation from a boundedly rational player. We show that “strong” players, i.e., players whose strategic complexity is less stringently bounded, can orchestrate the online correlation of the actions of “weak” players, where this correlation is concealed from an opponent of “intermediate” strength. The feasibility of such “online concealed correlation” is reflected in the individually rational payoff of the opponent and in the equilibrium payoffs of the repeated game.

Keywords: Repeated games; Bounded recall; Finite automata; Concealed correlation; Folk theorem; Equilibrium payoffs (search for similar items in EconPapers)
JEL-codes: C72 C73 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (3)

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Working Paper: Online Concealed Correlation and Bounded Rationality (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:88:y:2014:i:c:p:71-89

DOI: 10.1016/j.geb.2014.08.004

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