Showing papers by "Tadashi Sekiguchi published in 2004"

Reputation and Turnover

Abstract: We consider a repeated duopoly game where each firm privately chooses its investment in quality, and realized quality is a noisy indicator of the firm's investment. We focus on dynamic reputation equilibria, whereby consumers "discipline" a firm by switching to its rival in the case that the realized quality of its product is too low. This type of equilibrium is characterized by consumers' tolerance level - the level of product quality below which consumers switch to the rival firm - and firms' investment in quality. Given consumers' tolerance level, we determine when a dynamic equilibrium that gives higher welfare than the static equilibrium exists. We also derive comparative statics properties, and characterize a set of investment levels and, hence, payoffs that our equilibria sustain.

The Folk Theorem for Repeated Games with Observation Costs

Abstract: This paper studies repeated games with private monitoring where players make optimal decisions with respect to costly monitoring activities, just as they do with respect to stage-game actions. We consider the case where each player can observe other players' current-period actions accurately only if he incurs a certain level of disutility. In every period, players decide whether to monitor other players and whom to monitor. We show that the folk theorem holds for any finite stage game that satisfies the standard full dimensionality condition and for any level of observation costs. The theorem also holds under general structures of costless private signals and does not require explicit communication among the players. Therefore, tacit collusion can attain efficient outcomes in general repeated games with private monitoring if perfect private monitoring is merely feasible, however costly it may be.

On the Negative Result in Finitely Repeated Games with Imperfect Monitoring

Abstract: This paper examines when a finitely repeated game with imperfect monitoring has a unique equilibrium outcome This problem is nontrivial under imperfect monitoring, because uniqueness of stage game equilibrium does not guarantee such a negative result We say an quilibrium is equilibrium minimaxing if any player's equilibrium payoff is her minimax value when the other players choose correlated actions from the support of the equilibrium We show that the negative result holds if all stage game correlated equilibria are \eqmmin\ and have the same payoffs We also argue that several weaker conditions do not imply the negative result