CFDP 1933

Truthful Equilibria in Dynamic Bayesian Games

Author(s): 

Publication Date: December 2013

Pages: 73

Abstract: 

This paper characterizes an equilibrium payoff subset for Markovian games with private information as discounting vanishes. Monitoring is imperfect, transitions may depend on actions, types be correlated and values interdependent. The focus is on equilibria in which players report truthfully. The characterization generalizes that for repeated games, reducing the analysis to static Bayesian games with transfers. With correlated types, results from mechanism design apply, yielding a folk theorem. With independent private values, the restriction to truthful equilibria is without loss, except for the punishment level; if players withhold their information during punishment-like phases, a “folk” theorem obtains also.

Keywords: 

Bayesian games, Repeated games, Folk theorem

JEL Classification Codes:  C72, C73