Seminar

The Impact of Monitoring in Infinitely Repeated Games: Perfect, Public, and Private

Guillaume Frechette (University of New York)

May 14, 2013, 14:00–15:30

Toulouse

Room MS 001

BEE Seminar

Abstract

In this paper we propose an experimental design to compare the impact of monitoring on cooperation in infinitely repeated games. More specifically, we study a prisoner's dilemma, with randomly termination, in the laboratory. Three monitoring structures are investigated, while keeping fixed the strategic form of the stage game: perfect monitoring, imperfect public monitoring, and imperfect private monitoring. Under perfect monitoring, payoffs are stochastic (as under imperfect monitoring), but actions are observed. Under imperfect monitoring, each agent observes a noisy signal of their opponent's action, but not the action itself. In the public monitoring case, the signals received are common knowledge; under private monitoring, a player does not know the signal observed by the opponent. We explore the choices and strategies used under each of these information structures and relate the observed behavior to the important forces present in theory. We find that subjects are able to sustain cooperation under imperfect monitoring, even when monitoring is private. Authors: Masaki Aoyagi, V. Bhaskar, and Guillaume R. Frechette