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Efficiency in repeated games with local interaction and uncertain local monitoring

Francesco Nava () and Michele Piccione ()
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Francesco Nava: Economics Department, London School of Economics
Michele Piccione: Economics Department, London School of Economics

Theoretical Economics, 2014, vol. 9, issue 1

Abstract: The paper discusses community enforcement in infinitely repeated, two-action games with local interaction and uncertain monitoring. Each player interacts with and observes only a fixed set of opponents, of whom he is privately informed. The main result shows that when beliefs about the monitoring structure have full support, efficiency can be sustained with sequential equilibria that are independent of the players' beliefs. Stronger results are obtained when only acyclic monitoring structures are allowed or players have unit discount rates. These equilibria satisfy numerous robustness properties.

Keywords: Local monitoring; repeated games; cooperation; networks (search for similar items in EconPapers)
JEL-codes: C72 C73 D85 (search for similar items in EconPapers)
Date: 2014-02-05
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