Correlation of players' actions may evolve in the common course of play of a repeated game with perfect monitoring ("online correlation"), and we study the concealment of such correlation from a boundedly rational player. We show that "strong" players, i.e., players whose strategic complexity is less stringently bounded, can orchestrate the online correlation of the actions of "weak" players, where this correlation is concealed from an opponent of "intermediate" strength. The feasibility of such "online concealed correlation" is reflected in the individually rational payoff of the opponent and in the equilibrium payoffs of the repeated game. This result enables the derivation of a folk theorem that characterizes the set of equilibrium payoffs in a class of repeated games with boundedly rational players and a mechanism designer who sends public signals.
We consider games in which players search for a hidden prize, and they have asymmetric information about the prize's location. We study the social payoff in equilibria of these games. We present sufficient conditions for the existence of an equilibrium that yields the first-best payoff (i.e., the highest social payoff under any strategy profile), and we characterize the first-best payoff. The results have interesting implications for innovation contests and R&D races.
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