A folk theorem in infinitely repeated prisoner's dilemma with small observation cost

Yoshifumi Hino

MPRA Paper from University Library of Munich, Germany

Abstract: We consider an infinitely repeated prisoner's dilemma under costly monitoring. If a player observes his opponent, then he pays an observation cost and knows the action chosen by his opponent. If a player does not observe his opponent, he cannot obtain any information about his opponent's action. Furthermore, no player can statistically identify the observational decision of his opponent. We prove efficiency without any signals. Then, we extend the idea with a public randomization device and we present a folk theorem for a sufficiently small observation cost when players are sufficiently patient.

Keywords: Costly observation; Efficiency; Folk theorem; Prisoner's dilemma (search for similar items in EconPapers)
JEL-codes: C72 C73 D82 (search for similar items in EconPapers)
Date: 2018-12-10, Revised 2019-09-13
New Economics Papers: this item is included in nep-gth and nep-mic
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