Cooperation under incomplete information on the discount factors

Cy Maor, Eilon Solan*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

In repeated games, cooperation is possible in equilibrium only if players are sufficiently patient, and long-term gains from cooperation outweigh short-term gains from deviation. What happens if the players have incomplete information regarding each other’s discount factors? In this paper we look at repeated games in which each player has incomplete information regarding the other player’s discount factor, and ask when full cooperation can arise in equilibrium. We provide necessary and sufficient conditions that allow full cooperation in equilibrium that is composed of grim trigger strategies, and characterize the states of the world in which full cooperation occurs. We then ask whether these “cooperation events” are close to those in the complete information case, when the information on the other player’s discount factor is “almost” complete.

Original languageEnglish
Article number431
Pages (from-to)321-346
Number of pages26
JournalInternational Journal of Game Theory
Volume44
Issue number2
DOIs
StatePublished - 26 May 2015

Keywords

  • Common belief
  • Cooperation
  • Incomplete information
  • Prisoner’s dilemma
  • Rationalizability
  • Repeated games

Fingerprint

Dive into the research topics of 'Cooperation under incomplete information on the discount factors'. Together they form a unique fingerprint.

Cite this