Dynamic Games with Information Lag
V. Bhaskar, Ichiro Obara*
Date: 2010-05-21 3:30 pm – 4:00 pm
Last modified: 2010-05-17
Abstract
In this paper, we examine how information lag would affect efficiency in long term relationships. Formally, our model is a repeated game with information lag. Our main result is that information lag often improves efficiency when the monitoring is imperfect. But we also show that information lag never improves efficiency with perfect monitoring. These results suggest that the effect of information lag can be positive or negative, depending on the underlying information structure.