March 26, 2013, 11:00–12:30
Toulouse
Room MS 001
Economic Theory Seminar
Abstract
This paper characterizes a subset of equilibrium payoffs for Markovian games with private information as the discount factor vanishes. Monitoring might be imperfect, transitions may depend on the action profile, types might be correlated or not, values can be private or interdependent. It focuses on equilibria in which players report their information truthfully in every period. This characterization generalizes those obtained for repeated (and stochastic) games with public monitoring, and reduces to a collection of Bayesian games with transfers. These Bayesian games can be analyzed using standard techniques from static mechanism design: in the case of independent private values, Pareto-efficient payoffs are obtained by means of a version of the AGV mechanism; in the case of correlated types, the results of Crémer and McLean (1988) can be brought to bear, resulting in a folk theorem.
Keywords
Bayesian games; repeated games; folk theorem;