Abstract
This paper analyzes repeated games with private monitoring, where in each period each player receives a signal of the other player's action in the previous period, and that signal is private information. Previous literature on discounted repeated games with private monitoring has not shown whether or not (nearly) efficient equilibria exist. For a repeated prisoner's dilemma satisfying a certain assumption regarding stage game payoffs, we show that there exists a nearly efficient sequential equilibrium, provided that imperfectness of signals is small and players are patient.Journal of Economic LiteratureClassification number: C73.
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