Perfect communication equilibria in repeated games with imperfect monitoring


Games and Economic Behavior

November 2009, vol. 67, n°2, pp.682-694

Departments: Economics & Decision Sciences, GREGHEC (CNRS)

Keywords: Repeated games, Imperfect monitoring, Communication equilibria

This paper introduces an equilibrium concept called perfect communication equilibrium for repeated games with imperfect private monitoring. This concept is a refinement of Myerson's [Myerson, R.B., 1982. Optimal coordination mechanisms in generalized principal agent problems, J. Math. Econ. 10, 67–81] communication equilibrium. A communication equilibrium is perfect if it induces a communication equilibrium of the continuation game, after every history of messages of the mediator. We provide a characterization of the set of corresponding equilibrium payoffs and derive a Folk Theorem for discounted repeated games with imperfect private monitoring