Infinitely repeated games with public monitoring and monetary transfers

Goldlücke, Susanne; Kranz, Sebastian

doi:10.1016/j.jet.2012.01.008

Cited by 32 publications

(29 citation statements)

References 22 publications

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“…For more details, see Goldlücke and Kranz (2012). We posit that the players should have the opportunity to agree on such a payoff and then follow through on their agreement; that is, any proposal to play as if conditionally switching to different histories in the same equilibrium should be taken seriously.…”

Section: A Foundation For Meaningful Proposalsmentioning

confidence: 99%

“…Goldlücke and Kranz (2013;henceforth GK) showed that if renegotiation is applied only before the transfer phase, then "strong optimality" (Levin (2003)), "strong perfection" (Rubinstein (1980)), and "strong renegotiation proofness" (Farrell and Maskin (1989)) all select the entire Pareto frontier of SPE payoffs. Goldlücke and Kranz (2013;henceforth GK) showed that if renegotiation is applied only before the transfer phase, then "strong optimality" (Levin (2003)), "strong perfection" (Rubinstein (1980)), and "strong renegotiation proofness" (Farrell and Maskin (1989)) all select the entire Pareto frontier of SPE payoffs.…”

Section: Application To the Prisoners' Dilemmamentioning

confidence: 99%

“…Also note that it is not helpful to have both players make positive transfers-one could reduce both transfers equally until one equals zero, loosening the incentive constraints without affecting the continuation value. For more details, see Goldlücke and Kranz (2012). 7 The players can always ignore the bargaining phase, so V (S SPE ) ⊇ V (S NB ).…”

Section: A Foundation For Meaningful Proposalsmentioning

confidence: 99%

“…These properties contrast with the equilibria selected by renegotiationproofness theories. Goldlücke and Kranz (2013;henceforth GK) showed that if renegotiation is applied only before the transfer phase, then "strong optimality" (Levin (2003)), "strong perfection" (Rubinstein (1980)), and "strong renegotiation proofness" (Farrell and Maskin (1989)) all select the entire Pareto frontier of SPE payoffs. For a discount factor of at least x−1 x , this is the line segment between (0 2) and (2 0).…”

Section: Application To the Prisoners' Dilemmamentioning

confidence: 99%

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A Theory of Disagreement in Repeated Games With Bargaining

Miller

Watson

2013

Econometrica

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This paper proposes a new approach to equilibrium selection in repeated games with transfers, supposing that in each period the players bargain over how to play. Although the bargaining phase is cheap talk (following a generalized alternating-offer protocol), sharp predictions arise from three axioms. Two axioms allow the players to meaningfully discuss whether to deviate from their plan; the third embodies a "theory of disagreement"-that play under disagreement should not vary with the manner in which bargaining broke down. Equilibria that satisfy these axioms exist for all discount factors and are simple to construct; all equilibria generate the same welfare. Optimal play under agreement generally requires suboptimal play under disagreement. Whether patient players attain efficiency depends on both the stage game and the bargaining protocol. The theory extends naturally to games with imperfect public monitoring and heterogeneous discount factors, and yields new insights into classic relational contracting questions.

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Section: A Foundation For Meaningful Proposalsmentioning

confidence: 99%

Section: Application To the Prisoners' Dilemmamentioning

confidence: 99%

Section: A Foundation For Meaningful Proposalsmentioning

confidence: 99%

Section: Application To the Prisoners' Dilemmamentioning

confidence: 99%

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A Theory of Disagreement in Repeated Games With Bargaining

Miller

Watson

2013

Econometrica

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“…In repeated games of complete information, it is rather obvious that linking games can only expand the set of sustainable Nash equilibrium outcomes -because players always have the option to condition their play on exactly the same history as before (Bernheim and Whinston, 1990;Spagnolo, 1999). A particularly relevant class of repeated linked games are those in which each round of a base game G is followed by a round of monetary transfers; see for example Malcomson and MacLeod (1989), Levin (2003), and Goldlücke and Kranz (2012). A monetary transfer from a violator to an enforcer corresponds qualitatively to the withholding of a reward, except the cost to the violator is the same as the benefit to the enforcer, whereas in our setting the cost to the violator is greater.…”

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confidence: 99%

Civic Capital in Two Cultures: The Nature of Cooperation in Romania and USA

et al. 2012

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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. Civic Capital in Two Cultures: The Nature of Cooperation in Romania and USA Terms of use: Documents in EconStor may AbstractWe experimentally investigate the nature of cooperation in various repeated games, with subjects from Romania and USA. We find stark cross-country differences in the propensity to sustain multilateral cooperation through bilateral rewards and punishments. U.S. groups perform well because sufficiently many cooperators are willing to discipline free riders. Romanian cooperators are less prone to jeopardize their productive bilateral relationships for the benefit of the group, collectively failing to provide adequate discipline. Our analysis indicates that the performance differences constitute a group-level phenomenon, being largely due differences in shared beliefs rather than differences in individuals' preferences. JEL-Code: D020, D030.

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Essays in Economic Dynamics

Matsumoto¹,

Szidarovszky²,

Asada³

2016

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The dissertation includes two sections, which apply dynamic economic models to study different economic issues. The Section Two studies the optimal design of the Pacific Salmon Treaty, which was signed by the U.S. and Canada in 1999 to share salmon on the Pacific coast. Moral hazard exists because countries may steal from each other. If a country's observed output is suspiciously too high, the treaty either reduces the country's future share, or asks the country to make a monetary transfer to its opponent. A calibrated version of our model shows that it is optimal for the U.S. to pay Canada $327.58 million every 30.68 years. Switching to the optimal contract improves the total welfare by 1.54%.

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Infinitely repeated games with public monitoring and monetary transfers

Cited by 32 publications

References 22 publications

A Theory of Disagreement in Repeated Games With Bargaining

A Theory of Disagreement in Repeated Games With Bargaining

Civic Capital in Two Cultures: The Nature of Cooperation in Romania and USA

Essays in Economic Dynamics

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