TY - JOUR
T1 - Communication in repeated games with costly monitoring
AU - Ben-Porath, Elchanan
AU - Kahneman, Michael
PY - 2003/8
Y1 - 2003/8
N2 - We study repeated games with discounting where perfect monitoring is possible, but costly. It is shown that if players can make public announcements, then every payoff vector which is an interior point in the set of feasible and individually rational payoffs can be implemented in a sequential equilibrium of the repeated game when the discount factor is high enough. Thus, efficiency can be approximated even when the cost of monitoring is high, provided that the discount factor is high enough.
AB - We study repeated games with discounting where perfect monitoring is possible, but costly. It is shown that if players can make public announcements, then every payoff vector which is an interior point in the set of feasible and individually rational payoffs can be implemented in a sequential equilibrium of the repeated game when the discount factor is high enough. Thus, efficiency can be approximated even when the cost of monitoring is high, provided that the discount factor is high enough.
KW - Communication
KW - Costly monitoring
KW - Repeated games
UR - http://www.scopus.com/inward/record.url?scp=0042659323&partnerID=8YFLogxK
U2 - 10.1016/S0899-8256(03)00022-8
DO - 10.1016/S0899-8256(03)00022-8
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AN - SCOPUS:0042659323
SN - 0899-8256
VL - 44
SP - 227
EP - 250
JO - Games and Economic Behavior
JF - Games and Economic Behavior
IS - 2
ER -