Failure of gradualism under imperfect monitoring

Guéron, Yves

doi:10.1016/j.jet.2015.01.006

Cited by 8 publications

(13 citation statements)

References 17 publications

(56 reference statements)

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“…Even though the introduction of irreversibility and imperfect monitoring decreases efficiency significantly, we still find that the behavior of subjects in the game with irreversibility and imperfect monitoring departs from the zero‐contribution prediction of Guéron (2015). We find that more altruistic individuals tend to contribute more in the first period and that the behavior of conditional cooperation is prevalent in subsequent periods.…”

Section: Introductioncontrasting

confidence: 67%

“…In games of imperfect public monitoring, players observe a public signal

y_{t}

, which is the only information they have about their partner's play. The distribution of

y_t

conditional on contribution levels

(c_{1,t},c_{2,t})

is common knowledge and satisfies a continuity requirement: for small changes in actions, the change in the distribution of the signal is also small (see Guéron, 2015). We use a noise structure that is multiplicative in the sum of contributions made by two players:

\begin{equation*} y_t = {\left(c_{1,t} + c_{2,t}\right)}\epsilon _t , \end{equation*}

where the

\epsilon _{t}

are i.i.d .…”

Section: Theorymentioning

confidence: 99%

“…Thus, players must build up cooperation gradually. However, when the actions of opponents are imperfectly observed, incentives for the gradual build‐up of cooperation can subtly fail to work, because as increments in cooperation become arbitrarily small, players are no longer able to detect deviations, leading to the unravelling of any potential cooperative equilibrium (Guéron, 2015). Given that the aforementioned situations with irreversible actions are often complicated with imperfect monitoring, the breakdown of cooperation may occur as a result.…”

Section: Introductionmentioning

confidence: 99%

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Irreversibility and Monitoring in Dynamic Games: Experimental Evidence

Choi

Guéron

et al. 2022

Int Economic Review

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This article provides experimental evidence on the impacts of irreversibility and imperfect monitoring on the efficiency and the equity of a repeated public goods game. We find that irreversibility and imperfect monitoring both lead to inefficient and unequal outcomes through different channels. Irreversibility lowers public goods contribution in earlier periods and makes the initial‐period contribution gap between two players long‐lasting. Imperfect monitoring hampers conditional cooperation and persistently reduces group contribution. A finite mixture estimation with conditional cooperators provides a coherent account of the treatment effects.

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Section: Introductioncontrasting

confidence: 67%

“…In games of imperfect public monitoring, players observe a public signal

y_{t}

, which is the only information they have about their partner's play. The distribution of

y_t

conditional on contribution levels

(c_{1,t},c_{2,t})

\begin{equation*} y_t = {\left(c_{1,t} + c_{2,t}\right)}\epsilon _t , \end{equation*}

where the

\epsilon _{t}

are i.i.d .…”

Section: Theorymentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Irreversibility and Monitoring in Dynamic Games: Experimental Evidence

Choi

Guéron

et al. 2022

Int Economic Review

Self Cite

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“…1 See Lockwood and Thomas (2002) and Guéron (2015) for a discussion on cooperation with gradualism and irreversibility in one's own level of cooperation.…”

mentioning

confidence: 99%

Co-operation in Social Dilemmas Through Position Uncertainty

Gallice

Monzón

2019

The Economic Journal

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We present a natural environment that sustains full co-operation in one-shot social dilemmas among a finite number of self-interested agents. Players sequentially decide whether to contribute to a public good. They do not know their position in the sequence, but observe the actions of some predecessors. Since agents realise that their own action may be observed, they have an incentive to contribute in order to induce potential successors to also do so. Full contribution can then emerge in equilibrium. The same environment leads to full co-operation in the prisoners’ dilemma.

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“…Guéron (2015) considers a discrete-time infinite horizon model and obtains an equilibrium uniqueness result under an imperfect monitoring set-up. 8 We use the so-called weak formulation, which is the standard way that a continuous-time game with imperfect monitoring is formulated in the literature (see Appendix B.2 for more formal description).…”

Section: Setupmentioning

confidence: 99%

Gradual Adjustment and Equilibrium Uniqueness Under Noisy Monitoring

Iijima

Kasahara

2016

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may AbstractWe study the implications of flexible adjustment in strategic interactions using a class of finite-horizon models in continuous time. Players take costly actions to affect the evolution of state variables that are commonly observable and perturbed by Brownian noise.The values of these state variables influence players' terminal payoffs at the deadline, as well as their flow payoffs. In contrast to the static case, the equilibrium is unique under a general class of terminal payoff functions. Our characterization of the equilibrium builds on recent developments in the theory of backward stochastic differential equations (BSDEs). We use this tool to analyze applications, including team production, hold-up problems, and dynamic contests. In a team production model, the unique equilibrium selects an efficient outcome when frictions vanish.

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Failure of gradualism under imperfect monitoring

Cited by 8 publications

References 17 publications

Irreversibility and Monitoring in Dynamic Games: Experimental Evidence

Irreversibility and Monitoring in Dynamic Games: Experimental Evidence

Co-operation in Social Dilemmas Through Position Uncertainty

Gradual Adjustment and Equilibrium Uniqueness Under Noisy Monitoring

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