The Folk Theorem in Repeated Games with Private Monitoring

Abstract

We show that the folk theorem generically holds for N-player repeated games with private monitoring if the support of each player's signal distribution is sufficiently large. Neither cheap talk communication nor public randomization is necessary. In Chapter 1, we introduce the model, state the assumptions and the main result, and offer the overview of the proof. In Chapter 2, we show the folk theorem in the two-player prisoners' dilemma, assuming special forms of communication. Given this chapter, we are left to extend the folk theorem to the general two-player game and the general N-player game with N no less than 3 and dispense with the special forms of communication. In Chapter 3, we summarize what new assumptions are sufficient for each extension. In the following chapters, we offer the proof: in Chapters 4 and 5, we extend the result to the general two-player game and the general N-player game, respectively, with the special forms of communication. In Chapters 6 and 7, we dispense with the special forms of communication in the two-player game and N-player game, respectively.