Codes of Conduct, Private Information, and Repeated Games

New relationships are often plagued with uncertainty because one of the players has some private information about her “type.” The reputation literature has shown that equilibria that reveal this private information typically involve breach of trust and conflict. But are these inevitable for equilibrium learning? I analyze self-enforcing relationships where one party is privately informed about her time preferences. I show that there always exist honest reputation equilibria, which fully reveal information and support cooperation without breach or conflict. I compare these to dishonest reputation equilibria from several perspectives. My results are applicable to a broad class of repeated games. (JEL C73, D82, D83, D86, Z13)

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Cooperative Homo economicus

A Cooperative Species ◽

10.23943/princeton/9780691151250.003.0005 ◽

2011 ◽

Cited By ~ 1

Author(s):

Samuel Bowles ◽

Herbert Gintis

Keyword(s):

Private Information ◽

Repeated Games ◽

Evolutionary Dynamics ◽

Public Information ◽

Folk Theorem ◽

The Self ◽

Correlated Equilibrium ◽

Homo Economicus ◽

Self Interest ◽

Game Theoretic

This chapter examines whether recent advances in the theory of repeated games, as exemplified by the so-called folk theorem and related models, address the shortcomings of the self-interest based models in explaining human cooperation. It first provides an overview of folk theorems and their account of evolutionary dynamics before discussing the folk theorem with either imperfect public information or private information. It then considers evolutionarily irrelevant equilibrium as well as the link between social norms and the notion of correlated equilibrium. While the insight that repeated interactions provide opportunities for cooperative individuals to discipline defectors is correct, the chapter argues that none of the game-theoretic models mentioned above is successful. Except under implausible conditions, the cooperative outcomes identified by these models are neither accessible nor persistent, and are thus labeled evolutionarily irrelevant Nash equilibria.

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Learning from Private Information in Noisy Repeated Games

SSRN Electronic Journal ◽

10.2139/ssrn.1703580 ◽

2010 ◽

Cited By ~ 2

Author(s):

Drew Fudenberg ◽

Yuichi Yamamoto

Keyword(s):

Private Information ◽

Repeated Games

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On the theory of repeated games with private information

Economics Letters ◽

10.1016/0165-1765(91)90140-g ◽

1991 ◽

Vol 35 (3) ◽

pp. 257-261 ◽

Cited By ~ 8

Author(s):

Hitoshi Matsushima

Keyword(s):

Private Information ◽

Repeated Games

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No-subsidy mantra of governance to attain the most efficiently competitive economy

Journal of Governance and Regulation ◽

10.22495/jgr_v1_i3_p7 ◽

2012 ◽

Vol 1 (3) ◽

pp. 55-64

Author(s):

Sankarshan Acharya

Keyword(s):

Private Information ◽

Codes Of Conduct ◽

Public And Private ◽

The Public ◽

Surplus Production ◽

Central Planner ◽

Individual Preferences ◽

Self Sufficiency ◽

Civil Codes ◽

Competitive Economy

This paper proves the existence of a practically implementable system of governance necessary to attain the most efficiently competitive economy without the arduous collection of private information on individual preferences through a central planner. This governance is constituted with tenets:(a) adoption of only known commonly agreed rules like (i) common civil codes of conduct and (ii) penalties for robbery, killing and usurpation of public and private wealth and (b) an irrevocable mandate to frame any new commonly agreed rule that may be discovered in future or to repeal or amend any prevailing rule which may be ascertained in future to be preferentially catering to subsets of people. The only feasible available norm for common agreement to set rules is self-sufficiency of each group like the households and companies. Self-sufficiency or no-subsidy mantra is defined by the net surplus (production minus consumption) of a group being greater than the transfer from the public exchequer to the group.

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