Bounding equilibrium payoffs in repeated games with private monitoring

Takuo Sugaya, Alexander Wolitzky
2017 Theoretical Economics  
We provide a simple sufficient condition for the existence of a recursive upper bound on (the Pareto frontier of) the sequential equilibrium payoff set at a fixed discount factor in two-player repeated games with imperfect private monitoring. The bounding set is the sequential equilibrium payoff set with perfect monitoring and a mediator. We show that this bounding set admits a simple recursive characterization, which nonetheless necessarily involves the use of private strategies. Under our
more » ... ition, this set describes precisely those payoff vectors that arise in equilibrium for some private monitoring structure if either nonstationary monitoring or communication is allowed.
doi:10.3982/te2270 fatcat:fi6h6lkjsjez3ickpldfuuk2ze