Robustness of public equilibria in repeated games with private monitoring

Abstract

A repeated game with private monitoring is "close" to a repeated game with public monitoring (or perfect monitoring) when (i) the expected payoff structures are close and (ii) the informational structures are close in the sense that private signals in the private monitoring game can be aggregated by some public coordination device to generate a public signal whose distribution is close to the distribution of the public signal in the public monitoring game. We provide a sufficient condition for the set of uniformly strict perfect public equilibria for a public monitoring game to be robust in nearby private monitoring games in the sense that they remain equilibria with respect to the public signal that is generated by such public coordination devices with truthful reporting. Our sufficient condition requires that every player is informationally small in a well-defined sense.

Third Party Sanctions in Games With Communication

“…Furthermore the construed equilibria involve some proposals for handling the generated information. These include majority rule (McLean et al, 2014) and checking for the compatibility of reports of different interaction monitors (Ben-Porath & Kahneman, 1996). In our case similar solutions will Third Party Sanctions in Games with Communication be used to formulate a third component of strategy, namely an interpretation mechanism.…”