Recursive structure and equilibria in games with private monitoring

Massimiliano Amarante

Economic Theory, 2003, vol. 22, issue 2, 353-374

Abstract: In each stage of a repeated game with private monitoring, the players receive payoffs and privately observe signals which depend on the players' actions and the state of world. I show that, contrary to a widely held belief, such games admit a recursive structure. More precisely, I construct a representation of the original sequential problem as a sequence of static games with incomplete information. This establishes the ground for a characterization of strategies and, hence, of behavior in interactive-decision settings where private information is present. Finally, the representation is used to give a recursive characterization of the equilibrium payoff set, by means of a multi-player generalization of dynamic programming. Copyright Springer-Verlag Berlin Heidelberg 2003

Keywords: Keywords and Phrases: Private monitoring; Incomplete information; Dynamic programming.; JEL Classification Numbers: C73; D82. (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (8)

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DOI: 10.1007/s00199-002-0322-7

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