Research Seminar on January 21: Mikhail Panov (New York University, USA)
Topic: Costly Public Transfers in Repeated Cooperation under Imperfect Monitoring
Date & Time: January 21, 2019 at 16.50
Place: 3A Kantemirovskaya st., room 346
Date & Time: January 21, 2019 (Monday) at 16.50
Place: 3A Kantemirovskaya st., room 257
Topic: Costly Public Transfers in Repeated Cooperation under Imperfect Monitoring
Speaker: Mikhail Panov (Assistant Professor at New York University, USA)
Language: English
Abstract:
We consider a two-player continuous-time repeated strategic interaction with imperfect monitoring
of hidden production and the possibility that players can make public transfers between
each other. Money transfers are costly: only a fraction k < 1 of the money sent is received
by the recipient (the case k=0 corresponds to pure money burning). We introduce the notion
of self-enforcing public agreement which mimics the notion of pure-strategy public perfect
equilibrium from the discrete time. For a fixed interest rate r > 0, we characterize the set of
payoffs attainable in self-enforcing public agreements, as well as the dynamics in the efficient
agreements. We show that adding the possibility of costly transfers increases the set of attainable
payoffs, because it allows one to provide incentives to one player with less cost to the other
player. We also show that costly transfers are used rarely and only after extreme histories when
promised continuation payoffs hit players’ individual rationality constraints.
Everyone interested is invited!