Communication in repeated games with costly monitoring

Elchanan Ben-Porath*, Michael Kahneman

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

22 Scopus citations

Abstract

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.

Original languageAmerican English
Pages (from-to)227-250
Number of pages24
JournalGames and Economic Behavior
Volume44
Issue number2
DOIs
StatePublished - Aug 2003

Keywords

  • Communication
  • Costly monitoring
  • Repeated games

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