Coordination failure in repeated games with private monitoring |
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Authors: | Takuo Sugaya Satoru Takahashi |
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Institution: | 1. Stanford Graduate School of Business, Knight Management Center, 655 Knight Way, Stanford, CA 94305, USA;2. Department of Economics, National University of Singapore, AS2 Level 6, 1 Arts Link, Singapore 117570, Republic of Singapore |
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Abstract: | Players coordinate continuation play in repeated games with public monitoring. We investigate the robustness of such equilibrium behavior with respect to ex-ante small private-monitoring perturbations. We show that with full support of public signals, no perfect public equilibrium is robust if it induces a “regular” 2×2 coordination game in the continuation play. This regularity condition is violated in all belief-free equilibria. Indeed, with an individual full rank condition, every interior belief-free equilibrium is robust. We also analyze block belief-free equilibria and point out that the notion of robustness is sensitive to whether we allow for uninterpretable signals. |
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Keywords: | C72 C73 D82 D83 |
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