COMMUNICATION IN REPEATED GAMES WITH IMPERFECT PRIVATE MONITORING

This paper examines repeated games in which each player observes a pri vate and imperfect signal on the actions played, and in which players are allowed to communicate using public messages. Providing incentives for players to reveal their observations generates (revelation) const raints that, combined with signal imperfections, may be a source of in efficiencies. However, by delaying the revelation of their observation s, players may economize on the cost of deterring deviations, and ther eby avoid these inefficiencies. Because a player would not want to tri gger a sanction that would penalize him too, revelation constraints al so tend to make sanctions difficult to enforce. However, with at least three players, detecting deviations may not require that all the play ers reveal their observations. In that case, we obtain a Nash threat V ersion of the Folk theorem. With two players, we do not obtain a simil ar result. Nevertheless, we show that an efficient outcome can (almost ) always be approximated.