The impact of monitoring in infinitely repeated games: Perfect, public, and private

Masaki Aoyagi, V. Bhaskar, Guillaume R. Fréchette

    Research output: Contribution to journalArticle

    Abstract

    This paper uses a laboratory experiment to study the effect of the monitoring structure on the play of the infinitely repeated prisoner's dilemma. Keeping the strategic form of the stage game fixed, we examine the behavior of subjects when information about past actions is perfect ( perfect monitoring), noisy but public (public monitoring), and noisy and private (private monitoring). We find that the subjects sustain cooperation in every treatment, but that their strategies differ across the three treatments. Specifically, the strategies under imperfect monitoring are both more complex and more lenient than those under perfect monitoring. The results show how the changes in strategies across monitoring structures mitigate the effect of noise in monitoring on efficiency.

    Original languageEnglish (US)
    Pages (from-to)1-43
    Number of pages43
    JournalAmerican Economic Journal: Microeconomics
    Volume11
    Issue number1
    DOIs
    StatePublished - Feb 1 2019

    ASJC Scopus subject areas

    • Economics, Econometrics and Finance(all)

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