The effect of decisions under uncertainty on imperfect monitoring games

Abstract

The study of repeated games with Imperfect Public Information began with [Abreu, D., Pearce, D., Stacchetti, E., 1986. Optimal cartel equilibria with imperfect monitoring, Journal of Economic Theory, 39, 251–269] using dynamic decomposition and was settled in [Fudenberg, D., Levine, D., Maskin, E., 1994. The folk theorem with imperfect public information, Econometrica, 62, 997–1039]. However, we suggest that if the effect of uncertainty and irreversibility are considered when punishment is exercised, the set of perfect public equilibria and their payoffs would change.