Date: 2006.4.27 (Thu) 13:00-14:15
Place: General Research Building, Room 663
Speaker: Yuichi Yamamoto
Title: Implicit Collusion through Long-Term Relationships
Keywords: microeconomics, game theory, folk theorem, repeated game, private monitoring

Affiliation: Graduate School of Economics, University of Tokyo
Position: Graduate Student
Adviser: Akihiko Matsui
Disciplines: microeconomics, game theory
Societies and Conferences: Kyoto Game Theory Workshop

Bibliography: Yuichi Yamamoto, Implicit Collusion through Long-Term Relationships, Human Science Integration Seminar Abstracts, No. 18, pp. 1, 2006.
(Please use this bibliography when you cite this abstract.)

Abstract:
The purpose of game theory is to analyze behavior of human beings where various agents interact and some agents’ interests do not coincide with others’ interests. In such a situation, the problem becomes drastically hard since a player has to predict the rivals’ action to determine her own optimal action while the rivals also want to predict their opponents’ action. We firstly define Nash equilibria, which is the central solution concept in game theory, and then observe that Nash equilibria cannot achieve efficiency in general games. Subsequently, we investigates behavior of players with long-term relationships. In this case, there exist Nash equilibria that can attain efficiency, i.e. players are able to cooperate even when they are self-interested. This is due to the fact that a self-interested action may slightly increase a player’s current payoffs but it decreases
her future payoffs since a self-interested behavior urges the opponents to punish her in the future periods. Finally, as a result of the author’s own research, we analyze long-term relationships where players cannot observe the opponents’ action directly but can receive noisy private information in every period. We can prove that efficiency is still achievable in some class of games.

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