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Efficiency in Repeated Games Revisited: The Role of Private Strategies
Author(s) -
Kandori Michihiro,
Obara Ichiro
Publication year - 2006
Publication title -
econometrica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 16.7
H-Index - 199
eISSN - 1468-0262
pISSN - 0012-9682
DOI - 10.1111/j.1468-0262.2006.00669.x
Subject(s) - repeated game , dilemma , imperfect , private information retrieval , microeconomics , economics , prisoner's dilemma , state (computer science) , folk theorem , property (philosophy) , game theory , mathematical economics , computer science , equilibrium selection , mathematics , computer security , linguistics , philosophy , geometry , epistemology , algorithm
Most theoretical or applied research on repeated games with imperfect monitoring has focused on public strategies : strategies that depend solely on the history of publicly observable signals. This paper sheds light on the role of private strategies : strategies that depend not only on public signals, but also on players' own actions in the past. Our main finding is that players can sometimes make better use of information by using private strategies and that efficiency in repeated games can be improved . Our equilibrium private strategy for repeated prisoners' dilemma games consists of two states and has the property that each player's optimal strategy is independent of the other player's state.