Conferences at Department of Economics, University of Toronto, Canadian Economic Theory Conference 2017

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Communication and Cooperation in Repeated Games

Yu Awaya*, Vijay Krishna

Last modified: 2017-04-18

Abstract


We study the role of communication in repeated games with private monitoring. In such games, players receive only noisy private signals about each other's actions. For a fixed discount factor, we identify conditions under which there are equilibria with "cheap talk" that result in nearly efficient payoffs, whereas all equilibria without such communication are bounded away from this outcome. Thus, in our model, communication is necessary for cooperation.