Repeated Games Played in a Network

36 Pages Posted: 23 Apr 2008

Date Written: March 1, 2008

Abstract

Delayed perfect monitoring in an infinitely repeated discounted game is modelled by allocating the players to a connected and undirected network. Players observe their immediate neighbors' behavior only, but communicate over time the repeated game's history truthfully throughout the network. The Folk Theorem extends to this setup, although for a range of discount factors strictly below 1, the set of sequential equilibria and the corresponding payoff set may be reduced. A general class of games is analyzed without imposing restrictions on the dimensionality of the payoff space. Due to this and the bilateral communication structure, truthful communication arises endogenously only under additional conditions. The model also produces a network result; namely, the level of cooperation in this setup depends on the network's diameter, and not on its clustering coefficient as in other models.

Keywords: Repeated Game, Delayed Perfect Monitoring, Network, Communication

JEL Classification: C72, C73, D85

Suggested Citation

Kinateder, Markus, Repeated Games Played in a Network (March 1, 2008). FEEM Working Paper No. 22.2008, Available at SSRN: https://ssrn.com/abstract=1115733 or http://dx.doi.org/10.2139/ssrn.1115733

Markus Kinateder (Contact Author)

Universidad de Navarra ( email )

Camino del Cerro del Aguila, 3
Pamplona, Navarra 31080
Spain

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