Approximate efficiency in repeated games with side‐payments and correlated signals

Side‐payments are common in many long‐term relationships. We show that when players can exchange side‐payments, approximate efficiency is achievable in any repeated game with private monitoring and communication, as long as the players can observe their own payoffs and are sufficiently patient, the efficient stage‐game outcome is unique, and the signal distribution has full support. Unlike existing results in the literature, our result does not require deviations to be statistically detectable.